The parent company of the online consumer lender LendUp has agreed to refund nearly $3.5 million to borrowers and pay $1.9 million in fines to settle claims that it misled borrowers about the terms and conditions of its loans.

San Francisco-based Flourish has also agreed to pay $1.06 million to the California Department of Business Oversight to cover the cost of the regulator's investigation into its lending and marketing practices.

The settlements were Wednesday by the California Department of Business Oversight and the Consumer Financial Protection Bureau.

The CFPB has ordered Flourish to pay $1.8 million in fines and refund $1.83 million to more than 50,000 clients. The California regulator has ordered the company to refund $1.6 million to customers and pay a fine of $100, 000.

The company was founded in 2012 to provide online loans to borrowers who do not have access to credit cards or other types of consumer credit. Google is among its investors. LendUp markets its small-dollar credit products as a better choice than payday loans, though its loans can carry triple-digit annual percentage rates.

The CFPB alleged that the company, which makes loans in 24 states, misled consumers in advertisements and failed to make good on its promise of improving consumers' creditworthiness. The agency also said that LendUp understated the annual percentage rate on its loans. It ordered LendUp to end deceptive loan practices and advertisements and retest its APR calculations.

"It did not pay enough attention to the consumer financial laws," CFPB Director Richard Cordray said in a news release. "The CFPB supports innovation in the fintech space, but startups are just like established companies in that they must treat consumers fairly and comply with the law."

California regulators found more than 385,000 violations of state payday and installment lending laws.

In 2015, LendUp made 75,188 loans in California, more than double what it originated a year earlier. The total principal on the loans was $22.3 million, an increased of 224% year over year.

LendUp officials said in an email that the issues "mostly date back to our early days as a company" when its resources were limited. "In those days we didn't have a fully built out compliance department," the email said. "We should have."

LendUp said it has established a ten-member compliance group and six-member legal team to make sure its products and practices meet regulatory standards.

"We've fully addressed the issues cited by our regulators, including discontinuing some services," the email said. "We have also worked to refund all affected customers."

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