CFPB Sues Student Lender Climb Credit and Investment Firm 1/0 for Deceiving Borrowers About Coding Bootcamps and Vocational Programs

WASHINGTON, D.C. - Today, the Consumer Financial Protection Bureau (CFPB) sued student lender Climb Credit, and its largest shareholder 1/0 ("one zero"), for inducing students to take out loans by misrepresenting the quality of the training programs at their partner schools and making false claims about graduates' hiring rates and salaries. The lawsuit alleges Climb Credit and 1/0 claimed to have vetted its partners' schools for "outcomes and value" but in fact offered loans for programs that had failed the defendants' own return-on-investment analysis or which they had not analyzed at all. The lawsuit also alleges that the defendants failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures. The CFPB is asking the court to order Climb Credit and 1/0 to stop their illegal practices, compensate the borrowers they harmed, and pay a civil penalty to the CFPB's victim relief fund.

"Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs," said CFPB Director Rohit Chopra. "Tens of thousands of students may have been impacted by Climb's actions, and the CFPB is suing Climb and its investor overlord to halt these activities and get relief for students."

Climb Credit, Inc. is a Delaware corporation headquartered in Las Vegas, Nevada that markets private student loans. Climb Credit was headquartered in New York until 2022 and it maintains significant operations there. The CFPB's lawsuit also names wholly owned subsidiaries Climb Investco and Climb GS Loan Fund. The investigation also uncovered facts to charge the company's controlling investor 1/0 Holdco LLC, and 1/0 Capital.

The CFPB alleges that the defendants maximized revenue by enticing potential customers into borrowing money for various vocational programs, including coding bootcamps. The lawsuit alleges that the defendants violated federal law, including by:

• Deceiving borrowers about its partner schools: The defendants told borrowers they had vetted partner schools' programs for outcomes and value, and touted a "return-on-investment" analysis. Partner schools put "Quality Verified" badges on their websites, and the defendants also operated a program comparison tool that made similar claims about return on investment. In reality, the defendants often did not vet programs for outcomes or value or used unreliable data in doing so.
• Exploiting consumers' trust by holding itself out as a reliable intermediary: Climb caused consumers to rely on it in identifying and choosing quality educational programs that they could pay for with Climb loans. And when consumers took out Climb loans to attend these programs. The defendants profited from consumers' trust even as they failed to vet programs for quality.
• Illegally ignoring red flags: In over 700 cases, the defendants told potential borrowers that a school had passed the return-on-investment analysis even when the defendants internally acknowledged they had low confidence in the school's claimed job placement rate.
• Hiding true costs of its loans: The defendants failed to accurately disclose finance charges on loan documents and failed to disclose the annual percentage rates when required to do so in marketing materials.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts and practices. The CFPB also has the authority to enforce the Truth in Lending Act and its implementing Regulation Z.

The CFPB's lawsuit seeks a stop to alleged unlawful conduct, redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB's victims relief fund.

Read today's complaint.

Read consumer complaints against Climb.

Consumers can submit complaints about financial products and services by visiting the CFPB's website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB's website.

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