Who Are WebBank and LendingClub

WebBank and LendingClub are both key players in the online lending industry, each serving distinct roles in the loan process.

What Is WebBank?

WebBank is an FDIC-insured, state-chartered industrial bank based in Salt Lake City, Utah. It specializes in niche financial solutions, including private-label and co-branded credit programs. WebBank partners with fintech companies and other businesses to provide lending services, acting as the originating bank for many online loan platforms.

What Is LendingClub?

LendingClub is a U.S.-based online marketplace lender, originally known for its peer-to-peer lending model. It was the first such platform to register loan offerings as securities with the Securities and Exchange Commission (SEC) and provide a secondary market for loan trading. Borrowers can apply for personal and business loans through LendingClub’s platform, with funding coming from investors who select loans to invest in.

In 2021, LendingClub settled with the Federal Trade Commission for $18 million on charges that the company deceived consumers about hidden fees and if their loan applications were approved.

The agreement also forbids LendingClub from making misrepresentations to loan applicants and requires that theLendingClub clearly and noticeably disclose the amount of any prepaid, up-front, or origination fee and the total amount of money that customers will receive  “Companies that profit by preying on consumers don’t just harm the families they cheated — they also harm their competitors that play by the rules. LendingClub fleeced consumers looking for a loan online, and will pay $18 million for its alleged misconduct,” said Samuel Levine, Acting Director of the FTC’s Bureau of Consumer Protection. “

The WebBank–LendingClub Relationship

WebBank and LendingClub work together to facilitate loans. When a borrower applies for a loan on LendingClub’s platform, WebBank is the initial lender, leveraging its national lending capabilities as a chartered bank. Shortly after issuing the loan, WebBank sells it to LendingClub or investors on the platform. This means WebBank serves as the originating lender, while LendingClub handles the loan’s servicing and investment distribution.

This partnership allows LendingClub to offer loans nationwide without needing separate state lending licenses.

However, this structure has been the subject of legal scrutiny, particularly regarding the “true lender” doctrine—determining whether WebBank or LendingClub is legally responsible for the loan’s terms.

Legal Implications and How Diwan Law, LLC Can Help

The evolving fintech landscape presents legal challenges for lenders, borrowers, and investors alike. Diwan Law, LLC provides expert counsel on consumer protection laws if you have concerns about online lending agreements or borrower rights.

Debt Defense Services at Diwan Law, LLC

If you are struggling with debt from an online loan or facing aggressive collection efforts, Diwan Law, LLC offers strategic debt defense services to protect your rights. Our firm helps clients with:

• Defending Against Debt Collection Lawsuits – If a lender or debt collector is suing you, we provide strong legal representation to challenge the claims and fight for a fair resolution.
• Negotiating Settlements – Our attorneys can negotiate with lenders to reduce your balance or establish manageable payment plans.
• Protecting Against Harassment and Unlawful Collection Tactics – We ensure debt collectors follow the law and take action against harassment, misrepresentation, or wrongful debt collection.
• Filing Claims Under Consumer Protection Laws – We help clients pursue legal claims under federal and state laws, such as the Fair Debt Collection Practices Act (FDCPA), when lenders or collectors violate consumer rights.

If you’re dealing with a dispute related to a LendingClub or WebBank loan, or any other online lender, Diwan Law, LLC is here to help. Our firm is dedicated to protecting consumers from unfair lending and aggressive collection tactics.

For a consultation and personalized legal guidance, contact Diwan Law, LLC today.