NOW COME the parties in the above-captioned matter, the Division and the Corporation, and stipulate and agree as follows:
- The Corporation shall pay an administrative penalty to the Division in the amount of two million dollars ($2,000,000). The penalty shall be due upon execution and shall be payable by check to the “Commonwealth of Massachusetts,” mailed to the Division of Banks, Attn: Consumer Finance Licensing Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
- LendingClub and Springstone shall cease and desist from engaging in any business activity that requires licensing or registration from the Division, prior to obtaining the appropriate license or approval from the Division, including, but not limited to, servicing loans on behalf of another and/or engaging in the business of a small loan company, as such business is described in General Laws chapter 140, section 96. Such activity includes, but not limited to, directly or indirectly engaging, for a fee, commission, bonus or other consideration, in the business of negotiating, arranging, aiding or assisting the borrower or lender in procuring or making loans of six thousand dollars or less, for which the amount paid or to be paid for interest and expenses, exceeds an amount equivalent to twelve per cent per annum, whether such loans are actually made by LendingClub or by another party, or engaging as a third party loan servicer.
- LendingClub and Springstone shall establish, implement and maintain adequate internal policies and procedures to ensure that the Company refrains from engaging in any business activity that requires licensing or registration from the Division, prior to obtaining the appropriate license or approval from the Division.
- It is understood that LendingClub may submit a complete application to obtain the relevant debt collector company license and small loan company license from the Division. It is further understood that Springstone may submit a complete small loan company license application. The Division shall have all of the discretion set forth within Massachusetts General Laws chapter 93, sections 24 to 28, the Division's regulation 209 CMR 18.00 et seq., Massachusetts General Laws chapter 140, section 96 to 114A, and the Division's regulation 209 CMR 20.00 et seq. in determining whether to issue the relevant licenses to LendingClub and Springstone, provided, however, that any such applications shall not be denied solely as a result of any of the issues resolved by this Consent Order or because the Corporation entered into the Consent Order or agreed to the issuance of this Consent Order.
- It is understood that, if licensed LendingClub and Springstone shall comply with the requirements set forth in applicable state and federal laws, rules, regulations, and published regulatory bulletins governing the conduct of those engaged directly or indirectly in the business of a small loan company in Massachusetts including but not limited to: Massachusetts General Laws chapter 140, sections 96 to 114A, inclusive, the Division’s regulations 209 CMR 20.00 et seq., and 209 CMR 26.00 et seq., and shall establish, implement, and maintain appropriate policies and procedures to ensure compliance.
- The Corporation shall identify and reimburse all Massachusetts consumers who paid any interest or fees on small loans arranged or serviced by LendingClub since August 1, 2011 or arranged by Springstone since April 17, 2014, which are in excess of the amount permitted under the small loan rate order issued under the small loan law under the following terms:
a. For all small loans that are currently active, the consumer reimbursement would be applied as a credit to the account. If the credit exceeds the unpaid balance of the account, the excess credit will be disbursed to the borrower(s) by check.
b. For all small loans that have been paid in full, the consumer reimbursement would be disbursed to the borrower(s) by check.
c. For all small loans that have been “charged off,” the consumer reimbursement would be applied to reduce the unpaid balance of the account and future credit reporting with respect to such account will be updated accordingly. If the consumer reimbursement exceeds the charged-off balance of the account, the excess credit would be disbursed to the borrower(s) by check.
d. All checks sent to joint borrowers, will be made payable to both borrowers. If a borrower demonstrates that a joint borrower should be removed as a payee (by, for example, providing the Corporation with a copy of a death certificate or other evidence that the joint borrower has died), then the Corporation may reissue the check in the sole borrower’s name. If the Corporation is uncertain as to the status of a joint borrower, the Corporation will refer the matter to the Division for further instructions.
e. Any reimbursement payments mailed to a consumer shall be mailed to the consumer’s last known address in the Company’s records or, if the address is invalid, to the address set forth for such borrower in the U. S. Postal Service national change of address database (NCOA Database). If joint borrowers have different addresses, the reimbursement payment will be mailed to the address of the primary borrower.
- Within one hundred eighty (180) days of the effective date of this Consent Order, LendingClub and Springstone shall submit to the Division evidence of all consumer reimbursements or credits issued under Paragraph 6 including but not limited to: the consumer’s name, the loan number, the amount reimbursed, the date of reimbursement, and the check number.
- LendingClub shall comply with the requirements set forth in applicable state and federal laws, rules, regulations, and regulatory bulletins governing the conduct of those engaged in the business of a third party loan servicer in Massachusetts, including but not limited to: Massachusetts General Laws General Laws chapter 93, sections 24 to 28 and the Division's regulation 209 CMR 18.00 et seq., and establish, implement, and maintain policies and procedures to ensure compliance.
- Nothing in this Consent Order shall be construed as permitting LendingClub or Springstone to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.
- Failure to comply with the terms of this Consent Order shall constitute grounds for formal regulatory action pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
- This Consent Order shall become effective immediately upon the date of its issuance.
- The provisions of this Consent Order shall be binding upon LendingClub and Springstone, and their respective subsidiaries, officers and directors, successors and assigns, and those persons in active participation with them, directly or indirectly, acting individually or through any corporate or other entity.
- In consideration of this Consent Order, the Division agrees not to pursue any other remedial measures, sanctions or penalties relative to this matter unless the Division is made aware of material information that is not addressed in this Consent Order, or if LendingClub or Springstone fails to comply with the terms of this Consent Order.
- The provisions of this Consent Order shall not limit, estop, or otherwise prevent any other state agency or department, from taking any other action under separate authority affecting the Corporation or any of its officers and directors, or their successors or assigns.
- The provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as the Commissioner or a court of competent jurisdiction modifies, terminates, suspends, or sets aside any provision of this Consent Order.
- In accordance with the terms of the Consent Agreement entered into by LendingClub and Springstone and the Commissioner, LendingClub and Springstone have waived all rights of appeal that they may have relative to this Consent Order or any of its provisions.
- This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and LendingClub and Springstone.
- The June 1, 2011 Consent Order entered into by the Corporation with the Commissioner is hereby superseded and replaced by this Consent Order.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:
Dated at Boston, Massachusetts, this 12th day of March, 2018.
Terence A. McGinnis
Commissioner of Banks