FTC warns loan comparison site sold rankings to highest bidders

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If you’ve never heard of LendEDU, you’ve most likely spotted one of their many quirky polls.

Take a recent one: 62% of student loan borrowers reportedly give up their right to vote in the 2020 presidential election if that meant their student loan debt was completely forgiven.

Truly? Are we totally motivated these days by self-interest, greed and a bottom line approach to what that means to me? Well, maybe more than meets the eye.

EDU loan – who often uses online surveys of 1,000 adults – clearly had a gimmick to publicize his name to tout, among other products, ways to refinance student loans. The more you search for loan products on the site, the more money they make.

And, according to consumer watchdogs, LendEDU played a little loose at more than a few stops along the way.

The site, which launched in 2014, claims to offer ways to compare the best student loan refinance lenders, the best mortgage lenders, the best personal loan choices, the best auto loans. The Hoboken, New Jersey-based company has been touted as a marketplace for a variety of financial products.

Yet which is better anyway?

Expect impartial rankings

Consumers might rightly imagine that the best rankings would be based on objective and unbiased metrics. But they would be wrong, according to one administrative complaint published in early February by the Federal Trade Commission.

“In fact, LendEDU sold its ranking to the highest bidder,” Andrew Smith, director of the FTC’s Office of Consumer Protection, said in a statement.

Following:Black women bear the heaviest burden in student debt crisis

Following:Why student loan debt is exploding for those 50 and over

Think of it as a “pay-to-play” online business model. Want to be the # 1 lender? A student loan refinancing company agreed to pay LendEDU $ 8.50 per click for a No.1 spot and spot on the rate chart, according to the FTC complaint.

And then the same student loan refinancing company was asked by LendEDU to almost double their payments to $ 16 per click in order to maintain that No.1 ranking, according to the FTC filing.

Such glowing reviews

According to the FTC, customer reviews could not be trusted either.

“I spent two minutes filling out a form and saved thousands of dollars,” one review read.

Who wouldn’t jump at a quick and easy opportunity to save a lot of money? Especially when other consumers seem so happy with the results?

But the LendEDU site touted “false positive reviews,” according to the FTC.

The FTC noted, “The vast majority of reviewers do not appear to have used LendEDU. ”

According to the FTC complaint, only 11 of the email addresses provided by LendEDU’s 126 reviewers on Trustpilot, which is a third-party review platform, match the email addresses consumers provided to LendEDU.

“Of those 126 reviews, 111, or 90%, were written or written by LendEDU employees or their family, friends or other associates,” according to the FTC.

A review from “Kenny” said, “LendEDU showed me the light at the end of the tunnel. I was drowning in student loan debt, then they arrived with a lifeboat and a warm blanket. The site The web was easy to navigate and with the help of their customer service team I saved a lot of money on refinancing. I cannot thank them enough and would recommend it to anyone! ”

Beautiful. Such passion. Such imagery – a “lifeboat and warm blanket” for someone drowning in student loan debt. But Kenny apparently had time to write these words of praise.

The FTC noted, “The review written by ‘Kenny’ is actually from a LendEDU employee using a false name.

And if that doesn’t make you sick as a consumer, here’s another zinger that isn’t in the FTC’s complaint.

In April 2018, the Chronicle of Higher Education revealed another disturbing development.

Leading Student Loan Debt Expert Named Drawn cloud could have been quoted in the Washington Post and the Boston Globe about some crazy polls – for example, 27% of those polled would contract the Zika virus to live debt free.

But, forgive me, as the old Joni Mitchell song suggests, we really didn’t know “Cloud” at all.

The Chronicle wrote that he spent over a week trying to verify Drew Cloud’s very existence. And only then did the company confirm that Cloud was a fake.

Nate Matherson, CEO of LendEDU, told The Chronicle that Drew Cloud was a “pseudonym that a diverse group of authors from Student Loan Report LLC use to share experiences and information related to the challenges students face in funding their education. studies”.

Nothing but a fake guy who sends fake emails to journalists, presents stories and interviews by email. Just another show, let them laugh when you go.

Matherson and other LendEDU employees did not return emails to comment on the FTC’s allegations for this column.

It’s not bad enough that consumers are already stressed out about their debt and don’t really know what to do when it comes to refinancing their student loans.

Now, something that’s supposed to be designed to make things a little bit clearer is pervaded by obscure judgment.

In general, consumer websites can be useful resources in helping people with their homework on various products, said Tom Widor, an FTC attorney in the Financial Practices Division of the Consumer Protection Bureau. the FTC.

But consumers should always be aware that they may not get the whole story. As a result, he said, it’s best to use multiple sources, consider the source of the content, and not give too much weight to just reading customer reviews.

“It’s really unclear whether the reviews or other content is essentially paid play deals,” Widor said.

He said the FTC is monitoring the market for fake reviews, deceptive influencer marketing, etc.

In October, for example, the FTC issued a social media hoax where a company, Devumi, sold fake followers to actors, athletes, musicians, writers and others who wanted to boost their appeal as influencers.

Under a proposed settlement order, LendEDU would be required to pay $ 350,000 and be prohibited from making the same types of false statements cited in the FTC’s complaint.

They should also disclose whether compensation is involved in a ranking. Yes, I imagine that’s something consumers would really like to know.

ContactSusan tompo To313-222-8876 Where [email protected]. Follow her on Twitter@trickster. Read more on Business and subscribe to our company newsletter.

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