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California City Today
By the People, for the People
Upstart Sued Again Over AI Risk Model Performance
Investor claims latest algorithm was too conservative, hurting lending volume and revenue.
Apr. 8, 2026 at 8:25pm
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A conceptual still life highlighting the growing legal risks and scrutiny facing financial technology companies over their AI-powered lending models.California City TodayAn Upstart Holdings Inc. investor has filed a proposed class action lawsuit against the company, alleging that its latest artificial intelligence lending model was calibrated too conservatively, overreacting to negative economic signals and reducing borrower approvals and loan origination volume, thereby hurting Upstart's revenue.
Why it matters
This lawsuit is the latest in a growing trend of securities class actions targeting companies' claims about the capabilities of their AI and machine learning models, as investors seek accountability for any performance issues or misrepresentations.
The details
The lawsuit, filed by investor Anthony Dunn in the U.S. District Court for the Northern District of California, claims that Upstart's 'Model 22' was overly cautious in its risk assessments, leading to a drop in borrower approvals and loan origination volume, and consequently, a decline in Upstart's revenue. The suit alleges that Upstart made misleading statements about the performance of its latest AI-powered lending model.
- The lawsuit was filed on April 8, 2026.
The players
Upstart Holdings Inc.
A financial technology company that uses artificial intelligence to provide lending services.
Anthony Dunn
An investor who has filed a proposed class action lawsuit against Upstart Holdings Inc.
What they’re saying
“Upstart's Model 22 was calibrated too conservatively, overreacting to negative macroeconomic signals, reducing borrower approvals, loan origination volume—and therefore, Upstart's revenue.”
— Anthony Dunn, Investor
What’s next
The court will determine whether to certify the lawsuit as a class action in the coming months.
The takeaway
This lawsuit highlights the growing scrutiny and accountability that companies face over the performance and claims made about their AI-powered products and services, especially in the financial technology sector.
