Lawsuit Accuses Blockchain-Based Lender Figure Lending of Predatory Practices in HELOC Marketing

News | June 14, 2024 By:

On Wednesday, June 5, 2024, Lee Ward filed a class action lawsuit against Figure Lending, LLC in the United States District Court for the Western District of North Carolina alleging fraudulent lending practices.

The suit claims that Figure Lending misrepresents its home equity lines of credit (HELOCs) and uses deceptive tactics like bait-and-switch schemes to lure borrowers in with attractive advertised rates. According to the complaint, Figure requires applicants to withdraw their full line of credit all at once, functioning more like a home equity loan rather than a flexible line of credit.

Multiple consumers have complained to the Better Business Bureau that after starting the online application process, they were denied or given a worse deal than originally quoted due to alleged technical glitches. The suit argues this amounts to predatory lending practices that purposefully deny borrowers their locked interest rates when market rates rise.

Figure Lending, a non-bank lender based in San Francisco, markets itself as utilizing blockchain and cryptocurrency technology to improve lending. However, the class action alleges the company fails to actually provide true HELOCs and misleads applicants about rates and loan amounts. Figure claims to offer loans of up to 80% of a home’s value but regularly provides far less, according to complaints.

The lawsuit has been ongoing since late 2022, when Ward initially filed in a Georgia state court. Figure Lending promptly removed the case to federal court and moved to dismiss before successfully transferring it to the District of Arizona, where Ward amended his complaint twice but still faced dismissal both times for lack of subject matter jurisdiction over a class of plaintiffs.

Under Arizona law, Ward was permitted to refile the suit after dismissal without prejudice, which he has now done in federal court in North Carolina, where Figure Lending is registered to do business. The complaint alleges Figure conducts substantial lending activity in North Carolina and has sufficient contacts to establish jurisdiction.

Consumer reviews posted on sites like the Better Business Bureau and Trustpilot accuse Figure of shady and deceptive practices like charging unexpected fees, failing to apply payments properly, and selling loans to new servicers without authorization. Complaints point to predatory equity loans disguised as HELOCs that inflate interest costs through mandatory lump sum withdrawals.

The class action lawsuit seeks to represent all Figure Lending customers nationwide who fell victim to similar misleading tactics and/or suffered financial damages. If certified as a class, the suit could pose a major liability for the international fintech company, which claims over 500 employees and has facilitated over $9 billion in loans to 100,000 borrowers across America since its founding.

Please contact BlockTribune for access to a copy of this filing.