Class Action Lawsuit Claims Figure Lending Misled Borrowers, Misrepresented Loans as HELOCs

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A proposed class action lawsuit accuses Figure Lending, LLC of engaging in a “bait-and-switch” scheme by falsely marketing its loans as home equity lines of credit (HELOC).

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The 39-page lawsuit claims the lender has misled borrowers into believing it provides HELOCs—whereby a homeowner can draw upon a line of credit secured by their home—and misrepresented the associated costs of the loans, including its “excessive” origination fee.

The suit contends that instead of offering HELOCs—which, like credit cards, allow borrowers to continuously tap into a credit line and pay interest only on what they spend—Figure Lending provides home equity loans through which the lender funds consumers’ entire approved loan amount at one time. Doing so means the lender generates “far more in fees and interest than it would from a real HELOC,” the complaint charges.

The plaintiff claims that Figure Lending, despite promoting its loans as HELOCs on its website and marketing materials, was actually “only willing to offer him a home equity loan for a set amount,” which it immediately deposited in full.

“By funding the entire amount, Figure was able to assess [the plaintiff] the maximum possible amount of fees and interest,” the filing argues. “[The plaintiff] was forced to make monthly payments higher than he had anticipated.”

The man alleges that he was ultimately charged an interest rate much higher than what the lender represented when he originally applied for a loan.

In addition, the lawsuit asserts that the company “actively misled” the plaintiff about the associated costs of the loan—in particular, an origination fee of almost $2,400, the case relays.

The plaintiff says he “would never have proceeded with the loan if he had been accurately informed” of the charge, which, according to the suit, was “far higher than an industry-standard origination fee.”

When the man eventually sought to pay off his loan, Figure Lending “used an improper formula” in calculating the payoff amount and assessed “excessive amounts of interest” and other unwarranted fees, the complaint contends.

What’s more, the lender sent the plaintiff “threatening notices” over an alleged outstanding debt, even though the man had already paid in full and his online account “plainly showed a balance of $0,” the filing claims.

Per the case, Figure Lending’s “underhanded tactics” have drawn the ire of hundreds of borrowers, who have complained to the Consumer Financial Protection Bureau and posted on the Better Business Bureau website and other platforms about the company’s “[d]eceptive and borderline predatory” policies.

The lawsuit looks to represent any borrowers who paid improper amounts for interest and fees based on Figure Lending’s listing of an improper amount on the payoff letter and/or were assessed a fee after paying the amount shown on the payoff letter.

The suit also seeks to cover those who—pursuant to the lender’s form agreement—are subject to Arizona law and obtained a loan advertised as a HELOC.

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