FTC: Re­fi­nanc­ing site sold rank­ings

LendEDU en­gaged in ‘pay for play’

USA TODAY US Edition - - MONEY -

If you never heard of LendEDU, you very likely might have spot­ted one of their many, many quirky sur­veys.

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

Re­ally? Are we driven to­tally these days by self in­ter­est, greed and a bot­tom-line ap­proach of how much is in it for me? Well, maybe more than might be ev­i­dent to the naked eye.

LendEDU – which of­ten uses on­line sur­veys of 1,000 adults – clearly had a gim­mick to get its name out there in order to tout, among other prod­ucts, ways to re­fi­nance stu­dent loans. The

One stu­dent loan re­fi­nance com­pany agreed to pay LendEDU $8.50 per click for a No. 1 spot and a spot on the rate table, ac­cord­ing to the FTC com­plaint.

more you re­searched lend­ing prod­ucts at the site, the more they made money.

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

The site, which was launched in 2014, claims to offer ways to com­pare the best stu­dent loan re­fi­nance lenders, the best mort­gage lenders, the best picks for per­sonal loans, the best auto loans. The Hoboken, N.J.-based com­pany was pitched as a mar­ket­place for a va­ri­ety of fi­nan­cial prod­ucts.

Yet what is the best any­way?

Ex­pect­ing un­bi­ased rank­ings

Con­sumers might rightly imag­ine that top rank­ings would be based on ob­jec­tive, un­bi­ased mea­sures. But they would be wrong, ac­cord­ing to an ad­min­is­tra­tive com­plaint re­leased in early February by the Fed­eral Trade Com­mis­sion.

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

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

And then the same stu­dent loan re­fi­nance com­pany was asked by LendEDU to nearly dou­ble its pay­ments to $16 per click in order to hold onto that No. 1 rank­ing, ac­cord­ing to the FTC fil­ing.

Such glow­ing re­views

Ac­cord­ing to the FTC, the cus­tomer re­views couldn’t be trusted ei­ther.

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

Who wouldn’t jump at a fast and easy chance to save big money? Es­pe­cially when other con­sumers ap­pear so happy with the re­sults?

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

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

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

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

One review from “Kenny” stated: “LendEDU showed me the light at the end of the tun­nel. I was drown­ing in stu­dent loan debt then they showed up with a lifeboat and a warm blan­ket. The web­site was easy to nav­i­gate and with the help of their cus­tomer ser­vice team, I saved a lot of money re­fi­nanc­ing. I can’t thank them enough and would rec­om­mend to any­one!”

Lovely. Such pas­sion. Such im­agery – a “lifeboat and a warm blan­ket” for some­one drown­ing in stu­dent loan debt. But Kenny ap­par­ently had time on the job to write those glow­ing words.

The FTC noted, “The review writ­ten by ‘Kenny’ ac­tu­ally comes from a LendEDU em­ployee us­ing a fake name.”

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

Back in April 2018, the Chron­i­cle of Higher Education un­rav­eled an­other un­set­tling de­vel­op­ment.

A top ex­pert on stu­dent loan debt named Drew Cloud might have been quoted in The Wash­ing­ton Post and the Bos­ton Globe about some crazy sur­veys – such as 27% of those sur­veyed 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 it spent more than 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 the Chron­i­cle then that Drew Cloud was a “pseu­do­nym that a di­verse group of au­thors at Stu­dent Loan Report

LLC use to share ex­pe­ri­ences and in­for­ma­tion re­lated to the chal­lenges col­lege stu­dents face with fund­ing their education.”

Noth­ing but a phony dude send­ing fake emails to jour­nal­ists, pitch­ing sto­ries and email in­ter­views. Just an­other show, leave ‘em laugh­ing when you go.

Mather­son and other LendEDU em­ploy­ees did not re­turn emails to pro­vide a comment to the FTC’s claims for this col­umn.

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

Now, some­thing that sup­pos­edly is de­signed to make things a bit clearer is over­run by clouded judg­ment.

In gen­eral, con­sumer web sites can be use­ful re­sources to help people do their home­work on var­i­ous prod­ucts, said Tom Wi­dor, a staff at­tor­ney in the divi­sion of fi­nan­cial prac­tices at the FTC’s Bureau of Con­sumer Pro­tec­tion.

But con­sumers still need to be aware that they may not be get­ting 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 re­ally is dif­fi­cult to know if re­views or other con­tent are ba­si­cally paid-for-play ar­range­ments,” Wi­dor said.

He said the FTC mon­i­tors the mar­ket­place for fake re­views, de­cep­tive in­flu­ence mar­ket­ing and the like.

In Oc­to­ber, for ex­am­ple, the FTC ad­dressed a so­cial me­dia hoax where one firm, 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 mis­rep­re­sen­ta­tions cited in the FTC’s com­plaint.

They would need to dis­close if com­pen­sa­tion is in­volved in any rank­ings as well. Yes, I’d imag­ine that’s some­thing con­sumers would in­deed like to know.

Su­san Tom­por Colum­nist USA TO­DAY

SU­SAN TOM­POR

The FTC said LendEDU led users to be­lieve the site of­fered ob­jec­tive in­for­ma­tion in­stead of paid place­ment.

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