[Federal Register Volume 83, Number 215 (Tuesday, November 6, 2018)]
[Notices]
[Pages 55540-55541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24207]


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FEDERAL TRADE COMMISSION

[File No. 162 3197]


Social Finance, Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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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\
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    \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).
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    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