NC Federal Court Dismisses Class Action Against Fintech Lender on Jurisdictional Grounds

A federal court in North Carolina recently dismissed a putative consumer class action against an online fintech lender accusing the lender of “bait-and-switch” marketing. The plaintiff alleged that the lender falsely advertised its home equity products as HELOCs when they functioned as closed-end home equity loans, thereby misleading consumers about the true nature of the financing.

The court dismissed the case on the threshold ground that the plaintiff failed to establish a proper jurisdictional basis under the Class Action Fairness Act (CAFA).  The court held that the plaintiff’s complaint did not satisfy the diversity requirements under CAFA because the plaintiff did not allege that he or any putative class member was a citizen of a state other than that of the defendant. 

The outcome is a threshold, procedural win, and the dismissal is without prejudice.  The plaintiff may attempt to file an amended complaint, or he may attempt to refile the complaint in a different forum.