LendingClub has settled with the Massachusetts banking regulator to the tune of $2 million over claims that the company made unlicensed loans in the state.

The state division of banks said that the San Francisco-based LendingClub made over 46,000 loans to Massachusetts consumers without a license since 2011, when it surrendered its small loan company license as a condition of a consent order. The division also said that it found additional unlicensed lending activity at Springstone Financial, a wholly owned subsidiary of LendingClub that has its main office in Westborough, Mass.

“The Division continues its aggressive efforts to protect Massachusetts consumers from unlawful lending and servicing practices by assuring that all activities are appropriately licensed and supervised,” Commissioner of Banks Terence McGinnis said in a press release. “We will continue our focus to ensure that companies doing business in the Commonwealth are properly licensed, regulated, and subject to regular examinations to determine compliance with applicable consumer protection laws.”

Outside of Lending Club offices

The settlement is related to a 2011 consent order in which the division said that various fees charged by LendingClub violated the state’s small-loan laws. As part of that order, LendingClub surrendered a special license that Massachusetts requires lenders to obtain if it makes loans of less than $6,000 at an interest rate greater than 12%.

“We worked cooperatively with the State of Massachusetts to resolve a licensing dispute,” a LendingClub spokesperson told American Banker by email. “Resolving this is another step in putting the legacy issues behind us and moving forward to concentrate on building the business. There will be no disruption to any operations as a result of this resolution, and we look forward to continuing to provide attractive financing opportunities to residents, patients and students in the State of Massachusetts.”

In addition to the $2 million fine, LendingClub must obtain a license with the state regulator and pay consumer restitution, which has yet to be calculated.

LendingClub operates an online marketplace that matches borrowers — often consumers who are looking to refinance credit card debt at a lower rate — with banks, hedge funds, individual savers and other loan purchasers.

The firm’s loans are originated by Salt Lake City-based WebBank in an arrangement that has enabled the company to avoid many state licensing rules. Springstone Financial, which was acquired by LendingClub in 2014, specializes in medical loans.

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