The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Climb Credit and its largest shareholder, 1/0, for allegedly misrepresenting the quality of training programs offered at partner schools.
Climb Credit, a student lender, is accused of making false claims regarding graduate hiring rates and salaries, which led students to take out loans. The lawsuit asserts that Climb Credit and 1/0 claimed to evaluate partner schools based on their “outcomes and value,” but provided loans for programs that did not meet their own return-on-investment criteria or were never evaluated. The CFPB contends that Climb Credit misled over 700 potential borrowers by stating that a school had successfully passed the return-on-investment analysis, even when Climb Credit’s internal communications showed a lack of confidence in the school’s reported job placement rates.
CFPB Director Rohit Chopra commented, “Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs. Tens of thousands of students may have been affected by Climb’s actions, and the CFPB is suing Climb and its investor to stop these practices and provide relief for affected students.”
The lawsuit also alleges that Climb Credit failed to properly disclose annual percentage rates in its online marketing and concealed loan origination fees in its disclosures.
In 2020, the Student Borrower Protection Center (SBPC) accused the company of misrepresenting educational programs and directing borrowers toward for-profit schools.
The CFPB aims to halt unlawful conduct, provide redress for affected borrowers, and impose a civil monetary penalty that would go into the CFPB’s victim relief fund.
Climb Credit is based in Las Vegas, and its co-founder, Vishal Garg, is also the CEO of Better.com, known for famously laying off 900 employees during a Zoom call in 2020.
Casey Powers, CEO of Climb Credit, responded to the CFPB’s lawsuit, stating, “The CFPB does not have evidence that any of the statements or data points we shared regarding the outcomes of the programs were misleading or harmful to borrowers—their own press release uses vague language such as ‘may have been impacted by Climb’s actions.'”
He expressed disappointment in the CFPB’s approach, noting that Climb Credit had cooperated fully for over three years, providing thousands of documents and testimony, and had shown willingness to negotiate a settlement. Powers argued that the lawsuit and the CFPB’s narrative detract from significant issues within the higher education system and misrepresents the positive outcomes many students achieve in these programs.
He emphasized that skills-based and certificate programs, which serve as alternatives to traditional four-year degrees, are viable career pathways in fields that require more talent. Powers stated that both policymakers and private companies, including the Biden-Harris administration, recognize this reality and are working to expand these opportunities for students. Climb Credit aims to continue its mission in this space.
This story has been updated to include comments from Climb Credit.