New York Attorney General James Leads Bipartisan Coalition Suing Predatory Lender OneMain for Scheme to Trap Consumers in Debt

USANewsOnline.Com Desk, New York : New York Attorney General Letitia James today led a bipartisan coalition of 12 other attorneys general in suing OneMain Financial (OneMain) for illegally misleading its customers and trapping tens of thousands of borrowers in expensive loans with hidden costs. OneMain advertises itself as a lender that provides loans to consumers in need, including those with poor credit. Attorney General James and the coalition allege that OneMain exploits its vulnerable customers by loading their already high-cost loans with expensive and often useless additional products like insurance policies. OneMain adds these products to consumers’ loans without their knowledge or by misleading them about the products’ terms and costs. As a result, customers are charged hundreds or thousands of dollars more for their loans than they expect. In a vicious cycle, consumers are often forced to refinance into more expensive loan packages in order to keep up with payments to OneMain, at which point OneMain misleads them again and packs more products into their loans. Attorney General James and the coalition are seeking court orders to stop OneMain’s misleading and abusive practices and to collect restitution for consumers who were cheated.
“OneMain targets people who are already struggling financially, saddling them with hidden fees and misleading loans to trap them in even more debt,” said Attorney General James. “These predatory tactics are driving up costs for working families across New York and the country. Today I am taking action to stop OneMain’s illegal and abusive business model and get New Yorkers their money back.”
OneMain is one of the largest non-bank installment lenders in the United States, with more than 1,300 branches across 44 states. OneMain markets itself as a lender but ambushes its customers with expensive add-on products for its loans. These include credit insurance products that claim to pay the loan off if consumers die, lose their jobs, or are injured, as well as non-credit products like home and auto membership clubs.
In many cases, OneMain adds these additional policies to the loan without consumers’ consent. OneMain buries the terms and conditions of these products in a stack of paperwork and rushes consumers through the loan closing to ensure that they do not understand what is in their loans. If borrowers refuse these add-ons or express concerns, OneMain employees pressure them to accept the terms. In some cases, OneMain charges the consumer for add-ons even if they decline them. As a result, customers are left with loan terms they do not understand and end up paying for products they do not want, have any use for, or even know they have.
When customers do learn about the add-on products, OneMain misleads them about the cost. OneMain never tells the customer how much the add-on products will cost once interest is applied until after the loan has been closed. The products are expensive, often costing customers hundreds or thousands of dollars more than they expect to pay. Sometimes customers are even charged more for these add-on products than they are for the money they borrow.
OneMain’s exploitative practices trap borrowers in cycles of debt, requiring them to take out additional loans to keep up with payments. Customers who try to refinance or extend the terms of their loans are misled again and are often saddled with new add-on products, driving up their costs.
Attorney General James and the coalition allege that OneMain’s practices violate state and federal consumer protection laws, including New York’s laws against illegal, fraudulent, deceptive, unfair, and abusive conduct and false advertising. With this lawsuit, Attorney General James and the coalition are seeking restitution for consumers who were unlawfully charged for these products, penalties, and disgorgement of all unlawful profits. The lawsuit also seeks a court order preventing OneMain from continuing its illegal practices and ordering OneMain to withdraw any negative information reported to credit agencies that may affect its customers’ credit scores and to abandon any legal proceedings against customers related to their add-on products.
Joining Attorney General James in filing this lawsuit are the attorneys general of Colorado, Maryland, Nevada, New Hampshire, New Jersey, North Dakota, Oklahoma, Pennsylvania, South Dakota, Virginia, Washington, and Wisconsin.
For New York, this matter is being handled by Assistant Attorney Generals Patrick Gibson and Benjamin Fishman of the Consumer Frauds and Protection Bureau. The Consumer Frauds and Protection Bureau is led by Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine, and is a part of the Division of Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy. Press Release