Online lender SoFi (Social Finance) is settling a class-action lawsuit by paying a $2.4m fine. The lawsuit was brought against the $4bn-valued fintech start regarding its use of ‘hard credit’ inquiries into potential borrowers.
According to reports the fine will include $625,000 in fees and $48,000 in cost reimbursements to the law firm that handled the case.
The lawsuit against the company included a class group of about 10,7000 consumers who applied for student loan refinancing.
As part of the terms of the agreement the company is not admitting to any wrongdoing.
The suit claims that the company conducted ‘hard credit’ checks that may lower an individual’s credit score as it can be interpreted as applying for too much credit. These checks may stay on someone’s credit score for several years. By contrast ‘soft checks’ do not impact credit score.
The lawsuit claims that SoFi said its credit checks would not impact credit score.
SoFi launched with the aim of offer more affordable student loan financing but has since expanded into other types of lending.
It has funded more than $10bn to date and raised just shy of $1.4bn from investors to date.
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