Recently released, the CFPB has taken One Main Financial task and ordered them to pay $20 Million for deceptive loan practices and add on services that benefited the company, not their clients. One Main failed to refund interest charges on over 25,000 customers who cancelled purchases within a “full refund period.” They also deceived clients to purchase add on products in order to obtain the loan they were needing.
According to the CFPB; “OneMain pressured its employees to load up its loans with extra charges through false promises of easy cancellation with full refunds,” said CFPB Director Rohit Chopra. “We are ordering OneMain to refund borrowers it cheated and to clean up its business practices.” One Main demanded that their employees upsell borrowers on every loan. Employees were paid to push these products. Manuals were distributed throughout the company training employees how to upsell these products even when consumers declined. Their sales people were evaluated on their rate of sale and could be fired/dismissed if they didn’t meet their quota’s.
The CFPB found that One Main Financial:
- Tricked borrowers into signing up for optional products: OneMain customers were led to believe that they could not receive a loan without signing up for an add-on product. Some employees added the products to paperwork without verbally informing the consumer that the products were included or optional, a practice referred to internally as “pre-packing.” If the consumer identified the products and asked for their removal, employees were expected to make it seem difficult to remove the products. In other cases, employees obscured written disclosures from consumers’ view, or verbally contradicted them.
- Kept $10 million in interest charges despite its “full-refund” policy: OneMain told borrowers they would receive a “full refund” on add-on purchases if they cancelled within a certain period (generally 30 days). However, OneMain unfairly failed to refund interest charges for about 25,000 borrowers who signed up for add-ons such as roadside assistance benefits, identity theft protection, or entertainment discounts. Because of how OneMain precomputed interest on some loans, customers had already been charged significant amounts of interest that the company did not refund. Over the past four years, OneMain kept approximately $10 million in interest charges attributable to add-ons cancelled within its purported “full refund period.”
As a result of One Main’s deceptions the CFPB has ordered them to pay redress to the consumers affected by these actions in the amount of $10 Million for improper charges. And, the order also stipulates $10 Million penalty to be paid to the CFPB to place in their Victims Relief Fund.
