The alternative lender deducted hundreds or even thousands of dollars in hidden up-front fees from loans, says the FTC in its complaint.

The watchdog even points to an internal Lending Club review which argues that the claim about "no hidden fees" and the amount consumers would receive “could be perceived as deceptive as it is likely to mislead the consumer.”

A lawyer for one of the company's largest investors also raised the alarm, warning that the fee claims could make it a target for authorities. Yet the concerns were ignored.

The complaint makes a host of other charges, including that Lending Club falsely told loan applicants that “Investors Have Backed Your Loan” while knowing that many of them would never get a loan, and of failing to get consumers’ acknowledgment of its information-sharing policy.

"This case demonstrates the importance to consumers of having truthful information from lenders, including online marketplace lenders," says Reilly Dolan, acting director, bureau of consumer protection, FTC. "Stopping this kind of conduct will help consumers make informed choices about loan offers."

The FTC action is another blow to a company that was once the darling of the alternative lending market. An IPO in 2014 saw its value hit $10 billion but it has been beset by scandal since, with founder Renaud Laplanche forced out in 2016 after an internal review found that $22 million in near-prime loans were sold to an institutional investor that did not want them.

Shares in the company fell 14% on the latest bad news and are now more than 80% down from the IPO.