SoFi must stop misleading consumers about the amount of money they can save by refinancing their loan through SoFi, the Federal Trade Commission declared Monday.
The action comes as the result of a complaint filed by the FTC against SoFi in October. The complaint accused SoFi of inflating the amount of savings borrowers could achieve by refinancing their student loans with the online lender, which is one of the nation’s largest student loan companies and a growing mortgage lender.
According to the FTC, since at least April 2016, SoFi “deceptively advertised inflated figures” about student loan refinances, basically claiming that it could save borrowers far more than is actually the case.
The FTC’s complaint stated that SoFi’s ads misrepresented the amount borrowers can save by as much as 200% in some cases by excluding large segments of customers from the calculations it used to make those claims.
According to the FTC, when SoFi’s ads made proclamations about lifetime savings, the ads did not include borrowers whose newly refinanced loans have a longer term than their previous loans.
The FTC stated that those borrowers typically end up paying much more money over the life of their loan – thousands of dollars more, on average. But those borrowers were not included in the population SoFi based its claims on.
At the time, the FTC said that SoFi had agreed to a tentative settlement that prohibits the company from misrepresenting the amount of savings that can be gained through its loan refinancing programs.
And Monday, the FTC announced that the agreement has been finalized and approved by all five of the FTC commissioners.
Under the final order, SoFi is prohibited from “misrepresenting to consumers how much money consumers will save or have saved using its products and from making any claims about any such savings unless the claims are backed up with reliable evidence,” the FTC said.
According to the FTC, the prohibition on SoFi misrepresenting loan savings in its ads lasts 20 years.
In a statement provided to HousingWire, SoFi reiterated its sentiments from when the FTC action was originally announced.
“We have always been committed to giving our current and prospective members clear and complete information with which to make smart financial choices, and are pleased to have this matter resolved,” a SoFi spokesperson said in the statement.