October 31st, 2018
During the 2017 Major League Baseball playoffs, SoFi aired a television ad that claimed borrowers who refinanced their student loans with the company saved an average of around $22,000 over the lifetime of their loans. A screenshot from the commercial is seen above.
Here’s what the ad failed to mention, according to an FTC complaint against the company filed late last week: In calculating the average lifetime savings of its customers, SoFi excluded borrowers whose repayment terms became longer as a result of refinancing with the company. And here’s why that’s important: The majority of these borrowers paid thousands of dollars more over the lifetime of their student loans than what they would have paid had they not refinanced with SoFi, the FTC said.
The complaint alleges that, since at least April 2016, SoFi made prominent false statements about the monthly and lifetime loan refinancing savings of its customers in television, print, and internet advertisements. When SoFi did disclose exclusions in its methodology, the disclosures were often buried in the fine print, the FTC said.
Under a proposed settlement, SoFi is not required to pay any restitution to consumers but the company is prohibited from misrepresenting how much money consumers will save or have saved using its products and from making any claims about any such savings, unless they are backed up with reliable evidence. What that means is if the company slips up again, it is more likely to face civil penalties.
The FTC said that it has also notified lenders making similar savings claims of its allegations against SoFi.
Find more of our coverage on student loan debt relief claims here.