Startup lending company SoFi says a critical report in The Times ‘reflects a lack of understanding of our business’


Mike Cagney, CEO, Chairman and co-founder of SoFi, speaks during the TechCrunch Disrupt event in New York City, U.S., May 16, 2017. REUTERS/Brendan McDermid

Social Finance has gone on the defensive following reports that problems within the internet financing company may go well beyond its cofounder, Mike Cagney.

Cagney on Monday resigned as chairman and announced he will step down as CEO by the end of the year amid allegations of widespread sexual harassment at the company, which is also known as SoFi. But an article in The New York Times reported on Tuesday indicated the company has more to worry about than how it treats women and detailed a series of questionable business practices.

Later that day, the company fired back at The Times via a letter posted on its website. Although it largely ignored the reports in the The Times about sexual misconduct at the company, SoFi disputed several points in the article concerning its business, saying they were inaccurate.

SoFi said it wouldn’t “address every inaccuracy in the story.”

“However,” it added, “we have some issues with the story that we want to address.”

The article alleged that SoFi’s growth could be attributed in part to a series of risky business lending habits. Cagney misrepresented SoFi’s student loan products to investors and asked customer service representatives to review and approve personal loans, even though they were not qualified to do so, according to the article.

But in its letter, SoFi denied that customer service representatives ever approved loans. Instead, senior loan officers have authority over whether to make loans, and the company uses proprietary algorithms that look at applicants’ credit history to determine their credit worthiness, SoFi said.

The Times’ reporting on the role its customer service representatives played “reflects a lack of understanding of our business,” the company said.

In response to allegations that the company did not sufficiently vet incomes for mortgage borrowers, SoFi wrote, “This is an incredibly vague claim, and we have no idea what this means.”

“Not only are we good at making loans, those loans outperform the industry,” the company wrote.

In its letter, SoFi did not directly address charges in The Times report that it mislead investors in 2012 about a new loan product. According to The Times, the company told investors that it had received $90 million in debt financing to fund the new loan product when it actually hadn’t secured that financing. SoFi later bought back the related loans from investors, according to The Times.

In addition to raising questions about SoFi’s business practices, The …read more

Source:: Business Insider

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