The LendingClub settlement was an $18 million Federal Trade Commission enforcement action that resolved charges the online lender hid origination fees from borrowers and sent misleading loan-approval notices. The FTC paid out more than $17.6 million to 61,990 consumers across two rounds of refunds in 2021 and 2022, averaging about $284 per person.1Federal Trade Commission. LendingClub Corporation The claim deadline was February 16, 2022, and the program is no longer accepting new submissions. If you received a check you never cashed, you may still be able to have it reissued.
What LendingClub Was Accused Of
The FTC’s case had two parts. First, LendingClub advertised loans with “no hidden fees” while quietly deducting an origination fee from the loan principal before disbursing the money. A borrower approved for $10,000 might receive $9,500 or less, and the shortfall sometimes ran to hundreds or thousands of dollars. Many borrowers only noticed the gap after the loan funded.
Second, the FTC alleged that LendingClub sent applicants notices telling them their loans were approved and that funding was imminent, when in fact a back-end credit review the borrowers were never told about could still reject them. Some consumers turned down other credit offers based on those notices.
LendingClub agreed to pay $18 million to settle the charges without admitting wrongdoing.2Federal Trade Commission. LendingClub Agrees to Pay $18 Million to Settle FTC Charges
Who Qualified and How Much They Received
Refunds went to borrowers who took out and repaid a personal loan through LendingClub before January 6, 2017 and were charged the undisclosed origination fees.3Federal Trade Commission. FTC Returns More Than $10 Million to Consumers Who Paid Hidden Fees to LendingClub The FTC and its refund administrator, Rust Consulting, identified eligible borrowers from LendingClub’s own records, so consumers didn’t have to prove they’d been harmed. Because this was an FTC enforcement action rather than a class-action lawsuit, no attorney or court filing was involved.
Individual refund amounts were tied to the size of the fee each borrower actually paid, so someone charged a $700 origination fee received more than someone charged $200. Payments went out by PayPal or physical check.
If You Have an Uncashed or Lost Refund Check
The FTC can reissue payments as long as money remains in the settlement fund. Contact the refund administrator listed for the program at ftc.gov/refunds and submit your request in writing by mail or email. After the initial distribution window closes, the FTC processes reissues roughly once a month.
If your original payment came through PayPal and you want a physical check instead, plan on at least 45 days from the initial payment date, since the FTC waits for PayPal to return the funds first.4Federal Trade Commission. Refund Programs – Frequently Asked Questions
Once the settlement fund is exhausted, uncashed payments may be reported to your state’s unclaimed property office. Most states require dormant funds to be turned over after a waiting period, typically two to five years. Search your state treasurer’s unclaimed property database by name to check whether any funds are being held for you.
Do You Owe Taxes on the Refund?
A refund of fees you were overcharged is generally treated as a return of your own money, not as new income. The IRS looks at what a payment was intended to replace, and reimbursement of an overcharge isn’t the same as a damage award or a lost-wages payment.5Internal Revenue Service. Tax Implications of Settlements and Judgments
The FTC generally does not issue 1099 forms to refund recipients. When the agency is required to report a payment to the IRS, a 1099 comes with the check. If you got your LendingClub refund without a 1099, you likely have no reporting obligation. If a 1099 was included, report that amount on your return.4Federal Trade Commission. Refund Programs – Frequently Asked Questions A tax professional can confirm your situation based on the paperwork you received.
Watch for Settlement Scams
Scammers routinely piggyback on real settlement programs, calling or emailing to demand a fee or bank details before releasing a “payout.” The FTC will never demand money, make threats, tell you to transfer funds, or promise a prize.6Federal Trade Commission. Recent FTC Cases Resulting in Refunds A legitimate FTC refund never requires an upfront payment.
If a message claiming to be from the FTC or a settlement administrator looks off, verify it before responding. The FTC’s list of active refund programs at ftc.gov/refunds includes the official administrator’s contact information for each case. Compare the phone number and program name against that list, and report anything that doesn’t match.
Where LendingClub Stands Now
LendingClub still operates but looks different than it did when the FTC filed its case. It now functions as LendingClub Bank, a nationally chartered digital marketplace bank and FDIC member, publicly traded on the NYSE under the ticker LC. The settlement resolved the FTC’s specific allegations about hidden fees and deceptive approval notices; it did not shut the company down or bar it from making loans. Anyone considering a LendingClub loan today is dealing with a regulated bank, not the lending platform structure that existed before 2017.