Student Loan Refinancing Site LendEDU Sold Positive Reviews, FTC Says
Tuesday, February 4th 2020, 5:14 am
By: CBS News
Popular personal finance website LendEDU has long touted itself as an impartial source of reviews of different student loan products. In fact, it sold its rankings to student-loan companies, the Federal Trade Commission alleged in a complaint unveiled on Monday.
"LendEDU told consumers that its financial product rankings were based on objective and unbiased information about the quality of the product being offered, but in fact LendEDU sold its rankings to the highest bidder," Andrew Smith, director of the agency's Bureau of Consumer Protection, said in a statement.
The FTC also fined LendEDU $350,000 and banned it from making false claims about the site's paid rankings.
LendEDU did more than lie about its rankings, the FTC said. The website allegedly tried to boost its own ratings by having employees, their friends and family members write positive reviews on other ratings sites. Of the 126 reviews for LendEDU on the consumer review site trustpilot.com, 90 were five-star reviews posted by LendEDU associates, the FTC said.
The complaint also names Nathaniel Matherson and Matthew Lenhard, co-founders of Shop Tutors, LendEDU's parent company, and Alexander Coleman, LendEDU's vice president of product.
The FTC does not name lenders who allegedly paid for rankings. A screenshot in the government announcement shows SoFi at the top of a LendEDU ranking, followed by Earnest and LendKey.
As of Monday, SoFi did not appear anywhere on LendEDU's rankings. Earnest was the top-ranked lender, while LendKey was eighth.
The rankings also included a disclaimer: "All companies seen in the table below are LendEDU partners who provide compensation to LendEDU. This compensation impacts where products appear in the table below," the note read.
None of the lenders responded to a request for comment. LendEDU did not respond to a request for comment.
This isn't the first time Shop Tutors has been accused of misrepresentation. In 2018, the Chronicle of Higher Education revealed that Drew Cloud, a purported expert on student loan debt who was widely quoted in the press, was a fabrication.
"Drew Cloud is 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," Matherson told the Chronicle of Higher Education.