83 FR 55540 - Social Finance, Inc.; Analysis To Aid Public Comment
FEDERAL TRADE COMMISSION Federal Register Volume 83, Issue 215 (November 6, 2018)
Federal Register Volume 83, Issue 215 (November 6, 2018)
| Page Range | 55540-55541 | |
| FR Document | 2018-24207 |
[Federal Register Volume 83, Number 215 (Tuesday, November 6, 2018)] [Notices] [Pages 55540-55541] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-24207] ----------------------------------------------------------------------- FEDERAL TRADE COMMISSION [File No. 162 3197] Social Finance, Inc.; Analysis To Aid Public Comment AGENCY: Federal Trade Commission. ACTION: Proposed consent agreement. ----------------------------------------------------------------------- SUMMARY: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order-- embodied in the consent agreement--that would settle these allegations. DATES: Comments must be received on or before November 28, 2018. ADDRESSES: Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write: ``Social Finance, Inc.; File No. 1623197'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/socialfinanceconsent by following the instructions on the web-based form. If you prefer to file your comment on paper, write ``Social Finance, Inc.; File No. 1623197'' on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), Washington, DC 20580; or deliver your comment to: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Evan Zullow (202-326-2914), Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for October 29, 2018), on the World Wide Web, at https://www.ftc.gov/news-events/commission-actions. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before November 28, 2018. Write ``Social Finance, Inc.; File No. 1623197'' on your comment. Your comment--including your name and your state--will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Website, at https://www.ftc.gov/policy/public-comments. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/socialfinanceconsent by following the instructions on the web-based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that website. If you prefer to file your comment on paper, write ``Social Finance, Inc.; File No. 1623197'' on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), Washington, DC 20580; or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service. Because your comment will be placed on the publicly accessible FTC Website at http://www.ftc.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else's Social Security number; date of birth; driver's license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any ``trade secret or any commercial or financial information which . . . is privileged or confidential''--as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on the public FTC Website--as legally required by FTC Rule 4.9(b)--we cannot redact or remove your comment from the FTC [[Page 55541]] Website, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request. Visit the FTC Website at http://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding, as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before November 28, 2018. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy. Analysis of Proposed Consent Order To Aid Public Comment The Federal Trade Commission (``Commission'') has accepted, subject to final approval, an agreement containing a consent order from Social Finance, Inc. and SoFi Lending Corp. (collectively ``SoFi''). The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement's proposed order. SoFi is an online lender that offers, among other credit products, student loan refinancing. The Commission's proposed complaint alleges that SoFi makes savings claims that, as detailed below, misrepresent how much money students have saved, will save, or will likely save by refinancing their student loans with SoFi. SoFi has prominently advertised that consumers who refinance their loans with SoFi have saved large average amounts of money over the lifetime of those loans or each month. These claims overstate consumers' average savings. SoFi's calculations of its members' average savings selectively excludes large categories of consumers who would likely pay more money, instead of saving. Specifically, when SoFi calculates its members' average lifetime savings it excludes all consumers who refinance into longer term loans, most of whom actually pay more over the lifetime of the loan. Further, when SoFi calculates its members' average monthly savings it excludes all consumers who refinance into shorter term loans, most of whom actually pay more on a monthly basis. As a result, SoFi's representations significantly inflate the average savings consumers have actually achieved--sometimes even doubling the actual savings. Additionally, when a consumer submits an application to refinance his or her student loan(s) and is presented with loan options, SoFi misrepresents that the consumer will save zero dollars when the consumer is actually expected to lose money. Specifically, if, for a fixed rate loan option, the consumer is expected to lose money over the lifetime of the loan, then SoFi falsely states that the consumer's lifetime savings will be ``$0.00.'' Likewise, if a consumer is expected to pay more on a monthly basis for a given loan option, then SoFi falsely states that the consumer's monthly savings will be ``$0.00.'' The proposed order will prevent SoFi from engaging in similar acts or practices. Part I.A. would prohibit SoFi from misrepresenting that consumers who obtain a credit product have saved, will save, or will likely save money, or a specific amount of money, over the lifetime of a credit product or over any other time period (e.g., monthly), including by representing that the amount of money saved over a specific time period will be zero when consumers will instead pay more money over that specific time period. Part I.B. would also prohibit SoFi from making any of the savings claims covered by Part I.A., unless those claims are substantiated with competent and reliable evidence. Part I.C. would prohibit SoFi from misrepresenting any other material fact about the performance, benefits, or characteristics of any credit product when making a savings claim covered by Part I.A. Parts II through VI of the proposed order are reporting and compliance provisions. Part II is an order distribution provision that requires SoFi to provide the order to current and future principals, officers, and corporate directors, as well as current and future managers, employees, agents and representatives who participate in certain duties related to the subject matter of the proposed complaint and order, and to secure statements acknowledging receipt of the order. Part III requires SoFi to submit a compliance report one year after the order is entered. It also requires SoFi to notify the Commission of corporate changes that may affect compliance obligations within 14 days of such a change. Part IV requires SoFi to maintain and upon request make available certain compliance-related records, including certain consumer complaints and unique advertisements. Part V requires SoFi to submit additional compliance reports within 10 business days of a written request by the Commission. Part VI is a provision ``sunsetting'' the order after twenty (20) years, with certain exceptions. The purpose of this analysis is to aid public comment on the proposed order. It is not intended to constitute an official interpretation of the complaint or proposed order, or to modify in any way the proposed order's terms. By direction of the Commission. Donald S. Clark, Secretary. Statement of Commissioner Rohit Chopra Today, the Federal Trade Commission has issued for public comment a settlement with SoFi, an online student lender. According to the FTC's complaint, SoFi's widely disseminated advertisements have significantly exaggerated the average savings that student loan borrowers achieve when they refinance through the company. These advertisements were deceptive and I agree that SoFi's actions were unlawful, so I have voted in favor. Our proposed resolution does not require SoFi to pay any money whatsoever for this misconduct. Ideally, SoFi would pay civil penalties for violating the law. Due to limitations in the FTC's authority, the agency cannot seek civil penalties in matters like these. However, the Consumer Financial Protection Bureau and the State Attorneys General would be able to seek penalties from SoFi under existing federal law.\1\ --------------------------------------------------------------------------- \1\ SoFi's alleged misconduct likely violated both the Federal Trade Commission Act's ban on unfair or deceptive practices and the Consumer Financial Protection Act's (CFPA) prohibition on unfair, deceptive, or abusive practices by those who offer or provide a consumer financial product or service. With some exceptions, States can enforce the CFPA and obtain remedies available under it. See 12 U.S.C. 5552(a). --------------------------------------------------------------------------- In future matters where we are unable to obtain monetary remedies, we should carefully consider whether partnering with other law enforcement agencies can lead to better results for consumers and deter bad actors from violating the law. [FR Doc. 2018-24207 Filed 11-5-18; 8:45 am] BILLING CODE 6750-01-P
![55540 Federal Register / Vol. 83, No. 215 / Tuesday, November 6, 2018 / Notices
burdens can increase the likelihood of ftcpublic.commentworks.com/ftc/ If you prefer to file your comment on
insolvency. Private equity participation socialfinanceconsent by following the paper, write ‘‘Social Finance, Inc.; File
is also associated with other firm instructions on the web-based form. If No. 1623197’’ on your comment and on
behavior that can reduce long-term you prefer to file your comment on the envelope, and mail your comment to
competition, including opportunistic paper, write ‘‘Social Finance, Inc.; File the following address: Federal Trade
asset sales. This risk may be more acute No. 1623197’’ on your comment and on Commission, Office of the Secretary,
when funds purchase assets in unusual the envelope, and mail your comment to 600 Pennsylvania Avenue NW, Suite
and distressed situations. the following address: Federal Trade CC–5610 (Annex D), Washington, DC
Enforcers must carefully examine Commission, Office of the Secretary, 20580; or deliver your comment to the
investors’ unique incentives that can 600 Pennsylvania Avenue NW, Suite following address: Federal Trade
drive firm behavior in ways that affect CC–5610 (Annex D), Washington, DC Commission, Office of the Secretary,
competition. To assess these incentives, 20580; or deliver your comment to: Constitution Center, 400 7th Street SW,
we must always actively probe the Federal Trade Commission, Office of the 5th Floor, Suite 5610 (Annex D),
entire circumstances of investor Secretary, Constitution Center, 400 7th Washington, DC 20024. If possible,
involvement in a merger transaction Street SW, 5th Floor, Suite 5610 (Annex submit your paper comment to the
under review. For example, what is the D), Washington, DC 20024. Commission by courier or overnight
buyer’s investment thesis and strategy? FOR FURTHER INFORMATION CONTACT: service.
How has the investor typically realized Evan Zullow (202–326–2914), Bureau of Because your comment will be placed
gains out of past investments? Does the Consumer Protection, Federal Trade on the publicly accessible FTC Website
buyer plan to invest more of its own Commission, 600 Pennsylvania Avenue at http://www.ftc.gov, you are solely
equity capital into the business or NW, Washington, DC 20580. responsible for making sure that your
simply further rely on debt financing? comment does not include any sensitive
SUPPLEMENTARY INFORMATION: Pursuant
When and how does the investor intend or confidential information. In
to Section 6(f) of the Federal Trade particular, your comment should not
to exit its investment? Given all of this, Commission Act, 15 U.S.C. 46(f), and
what really is the long-term impact on include any sensitive personal
FTC Rule 2.34, 16 CFR 2.34, notice is information, such as your or anyone
competition? hereby given that the above-captioned
While Commission staff certainly ask else’s Social Security number; date of
consent agreement containing a consent birth; driver’s license number or other
many of these questions in their review order to cease and desist, having been
of divestiture buyers, it will be state identification number, or foreign
filed with and accepted, subject to final country equivalent; passport number;
important to ensure that we are approval, by the Commission, has been
conducting careful and adequate due financial account number; or credit or
placed on the public record for a period debit card number. You are also solely
diligence with respect to buyers that are of thirty (30) days. The following
heavily reliant on debt financing and responsible for making sure that your
Analysis to Aid Public Comment comment does not include any sensitive
where investment firms exert significant describes the terms of the consent
control. health information, such as medical
agreement, and the allegations in the records or other individually
[FR Doc. 2018–24206 Filed 11–5–18; 8:45 am]
complaint. An electronic copy of the identifiable health information. In
BILLING CODE 6750–01–P full text of the consent agreement addition, your comment should not
package can be obtained from the FTC include any ‘‘trade secret or any
Home Page (for October 29, 2018), on commercial or financial information
FEDERAL TRADE COMMISSION
the World Wide Web, at https:// which . . . is privileged or
[File No. 162 3197] www.ftc.gov/news-events/commission- confidential’’—as provided by Section
actions. 6(f) of the FTC Act, 15 U.S.C. 46(f), and
Social Finance, Inc.; Analysis To Aid You can file a comment online or on FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)—
Public Comment paper. For the Commission to consider including in particular competitively
AGENCY: Federal Trade Commission. your comment, we must receive it on or sensitive information such as costs,
before November 28, 2018. Write sales statistics, inventories, formulas,
ACTION: Proposed consent agreement. ‘‘Social Finance, Inc.; File No. 1623197’’ patterns, devices, manufacturing
SUMMARY: The consent agreement in this on your comment. Your comment— processes, or customer names.
matter settles alleged violations of including your name and your state— Comments containing material for
federal law prohibiting unfair or will be placed on the public record of which confidential treatment is
deceptive acts or practices. The attached this proceeding, including, to the extent requested must be filed in paper form,
Analysis to Aid Public Comment practicable, on the public Commission must be clearly labeled ‘‘Confidential,’’
describes both the allegations in the Website, at https://www.ftc.gov/policy/ and must comply with FTC Rule 4.9(c).
complaint and the terms of the consent public-comments. In particular, the written request for
order—embodied in the consent Postal mail addressed to the confidential treatment that accompanies
agreement—that would settle these Commission is subject to delay due to the comment must include the factual
allegations. heightened security screening. As a and legal basis for the request, and must
result, we encourage you to submit your identify the specific portions of the
DATES: Comments must be received on comments online. To make sure that the comment to be withheld from the public
or before November 28, 2018. Commission considers your online record. See FTC Rule 4.9(c). Your
ADDRESSES: Interested parties may file a comment, you must file it at https:// comment will be kept confidential only
khammond on DSK30JT082PROD with NOTICES
comment online or on paper, by ftcpublic.commentworks.com/ftc/ if the General Counsel grants your
following the instructions in the socialfinanceconsent by following the request in accordance with the law and
Request for Comment part of the instructions on the web-based form. If the public interest. Once your comment
SUPPLEMENTARY INFORMATION section this Notice appears at http:// has been posted on the public FTC
below. Write: ‘‘Social Finance, Inc.; File www.regulations.gov/#!home, you also Website—as legally required by FTC
No. 1623197’’ on your comment, and may file a comment through that Rule 4.9(b)—we cannot redact or
file your comment online at https:// website. remove your comment from the FTC
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![Federal Register / Vol. 83, No. 215 / Tuesday, November 6, 2018 / Notices 55541
Website, unless you submit a of whom actually pay more on a unique advertisements. Part V requires
confidentiality request that meets the monthly basis. As a result, SoFi’s SoFi to submit additional compliance
requirements for such treatment under representations significantly inflate the reports within 10 business days of a
FTC Rule 4.9(c), and the General average savings consumers have written request by the Commission. Part
Counsel grants that request. actually achieved—sometimes even VI is a provision ‘‘sunsetting’’ the order
Visit the FTC Website at http:// doubling the actual savings. after twenty (20) years, with certain
www.ftc.gov to read this Notice and the Additionally, when a consumer exceptions.
news release describing it. The FTC Act submits an application to refinance his The purpose of this analysis is to aid
and other laws that the Commission or her student loan(s) and is presented public comment on the proposed order.
administers permit the collection of with loan options, SoFi misrepresents It is not intended to constitute an
public comments to consider and use in that the consumer will save zero dollars official interpretation of the complaint
this proceeding, as appropriate. The when the consumer is actually expected or proposed order, or to modify in any
Commission will consider all timely to lose money. Specifically, if, for a way the proposed order’s terms.
and responsive public comments that it fixed rate loan option, the consumer is By direction of the Commission.
receives on or before November 28, expected to lose money over the lifetime Donald S. Clark,
2018. For information on the of the loan, then SoFi falsely states that
Secretary.
Commission’s privacy policy, including the consumer’s lifetime savings will be
routine uses permitted by the Privacy ‘‘$0.00.’’ Likewise, if a consumer is Statement of Commissioner Rohit
Act, see https://www.ftc.gov/site- expected to pay more on a monthly Chopra
information/privacy-policy. basis for a given loan option, then SoFi Today, the Federal Trade Commission
falsely states that the consumer’s has issued for public comment a
Analysis of Proposed Consent Order To
monthly savings will be ‘‘$0.00.’’ settlement with SoFi, an online student
Aid Public Comment The proposed order will prevent SoFi lender. According to the FTC’s
The Federal Trade Commission from engaging in similar acts or complaint, SoFi’s widely disseminated
(‘‘Commission’’) has accepted, subject to practices. Part I.A. would prohibit SoFi advertisements have significantly
final approval, an agreement containing from misrepresenting that consumers exaggerated the average savings that
a consent order from Social Finance, who obtain a credit product have saved, student loan borrowers achieve when
Inc. and SoFi Lending Corp. will save, or will likely save money, or they refinance through the company.
(collectively ‘‘SoFi’’). a specific amount of money, over the
The proposed consent order has been These advertisements were deceptive
lifetime of a credit product or over any and I agree that SoFi’s actions were
placed on the public record for thirty other time period (e.g., monthly),
(30) days for receipt of comments by unlawful, so I have voted in favor.
including by representing that the Our proposed resolution does not
interested persons. Comments received amount of money saved over a specific require SoFi to pay any money
during this period will become part of time period will be zero when whatsoever for this misconduct. Ideally,
the public record. After thirty (30) days, consumers will instead pay more money SoFi would pay civil penalties for
the Commission will again review the over that specific time period. Part I.B. violating the law. Due to limitations in
agreement and the comments received, would also prohibit SoFi from making the FTC’s authority, the agency cannot
and will decide whether it should any of the savings claims covered by seek civil penalties in matters like these.
withdraw from the agreement and take Part I.A., unless those claims are However, the Consumer Financial
appropriate action or make final the substantiated with competent and Protection Bureau and the State
agreement’s proposed order. reliable evidence. Part I.C. would
SoFi is an online lender that offers, Attorneys General would be able to seek
prohibit SoFi from misrepresenting any penalties from SoFi under existing
among other credit products, student other material fact about the
loan refinancing. The Commission’s federal law.1
performance, benefits, or characteristics In future matters where we are unable
proposed complaint alleges that SoFi of any credit product when making a to obtain monetary remedies, we should
makes savings claims that, as detailed savings claim covered by Part I.A. carefully consider whether partnering
below, misrepresent how much money Parts II through VI of the proposed with other law enforcement agencies
students have saved, will save, or will order are reporting and compliance can lead to better results for consumers
likely save by refinancing their student provisions. Part II is an order
and deter bad actors from violating the
loans with SoFi. distribution provision that requires SoFi
SoFi has prominently advertised that law.
to provide the order to current and [FR Doc. 2018–24207 Filed 11–5–18; 8:45 am]
consumers who refinance their loans future principals, officers, and corporate
BILLING CODE 6750–01–P
with SoFi have saved large average directors, as well as current and future
amounts of money over the lifetime of managers, employees, agents and
those loans or each month. These claims representatives who participate in FEDERAL TRADE COMMISSION
overstate consumers’ average savings. certain duties related to the subject
SoFi’s calculations of its members’ matter of the proposed complaint and Privacy Act of 1974; System of
average savings selectively excludes order, and to secure statements Records
large categories of consumers who acknowledging receipt of the order. Part
would likely pay more money, instead III requires SoFi to submit a compliance AGENCY: Federal Trade Commission
of saving. Specifically, when SoFi report one year after the order is (FTC).
calculates its members’ average lifetime
khammond on DSK30JT082PROD with NOTICES
entered. It also requires SoFi to notify 1 SoFi’s alleged misconduct likely violated both
savings it excludes all consumers who the Commission of corporate changes the Federal Trade Commission Act’s ban on unfair
refinance into longer term loans, most of that may affect compliance obligations or deceptive practices and the Consumer Financial
whom actually pay more over the within 14 days of such a change. Protection Act’s (CFPA) prohibition on unfair,
lifetime of the loan. Further, when SoFi Part IV requires SoFi to maintain and deceptive, or abusive practices by those who offer
or provide a consumer financial product or service.
calculates its members’ average monthly upon request make available certain With some exceptions, States can enforce the CFPA
savings it excludes all consumers who compliance-related records, including and obtain remedies available under it. See 12
refinance into shorter term loans, most certain consumer complaints and U.S.C. 5552(a).
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Document Created: 2018-11-06 00:18:37
Document Modified: 2018-11-06 00:18:37
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Proposed consent agreement. | |
| Dates | Comments must be received on or before November 28, 2018. | |
| Contact | Evan Zullow (202-326-2914), Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. | |
| FR Citation | 83 FR 55540 |
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USC | CFR | eCFR