The popular personal finance website LendEDU has long been an independent source of ratings for various student loan products. In fact, it sold its rankings to student loan companies, the Federal Trade Commission claimed in a complaint submitted on Monday.
"LendEDU informed consumers that the ranking of its financial products was based on objective and unbiased information about the quality of the product offered. In fact, LendEDU sold the ranking to the highest bidder," said Andrew Smith, director of the agency's Consumer Protection Bureau. said in a statement.
The FTC also fined $ 350,000 and prohibited it from providing false information about the website's paid rankings.
According to the FTC, LendEDU has more than just lied. The website reportedly tried to improve its own ratings by posting positive reviews on other review sites by employees, their friends, and family members. Of the 126 reviews for LendEDU on the trustpilot.com website, 90 were five-star reviews from LendEDU employees, the FTC said.
The complaint also mentions 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 that are said to have paid for rankings. A screenshot in the government declaration shows SoFi at the top of a LendEDU ranking, followed by Earnest and LendKey.
SoFi has not been included in the LendEDU ranking list since Monday. Earnest was the best-placed lender, while LendKey was eighth.
The ranking also included a disclaimer: "All companies listed in the table below are LendEDU partners who provide LendEDU with compensation. This compensation affects where the products are listed in the table below," states the note.
None of the lenders responded to a request for comment. LendEDU did not respond to a request for comment.
This is not the first time Shop Tutors have been accused of misrepresentation. In 2018, the Chronicle of Higher Education revealed that Drew Cloud, an alleged student loan expert who was widely cited in the press, was an invention.
"Drew Cloud is a pseudonym that various Student Loan Report LLC authors use to share experiences and information related to the challenges that college students face in funding their education," Matherson told the Chronicle of Higher Education.