Thirteen state attorneys general sued OneMain Financial on Monday, alleging that the nonbank installment lender tricks borrowers into adding “expensive and often useless” products such as insurance to their loans.
In their complaint, the plaintiffs allege that OneMain Financial does so by adding these products without the borrower’s knowledge or by misleading them about the products’ cost and terms, the New York State Attorney General said in a Monday press release.
“OneMain targets people who are already struggling financially, saddling them with hidden fees and misleading loans to trap them in even more debt,” New York Attorney General Letitia James said in the release. “These predatory tactics are driving up costs for working families across New York and the country.”
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Together with New York, the plaintiffs include the attorneys general of Colorado, Maryland, Nevada, New Hampshire, New Jersey, North Dakota, Oklahoma, Pennsylvania, South Dakota, Virginia, Washington and Wisconsin, according to the release.
The plaintiffs allege that OneMain Financial’s practices violate state and federal consumer protection laws. They seek restitution for consumers, penalties, disgorgement of all unlawful profits, and a court order preventing the company from continuing these alleged practices and requiring it to withdraw negative information reported to credit agencies, per the release.
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In a statement released Monday, OneMain Financial said the lawsuit is meritless, the company will litigate it, and the firm looks forward to “proving the truth in court.”
“The states’ allegations are simply untrue — their case is wrong on the facts and wrong on the law and attempts to relitigate issues that were already reviewed by the Consumer Financial Protection Bureau and fully resolved,” the company said in the statement. “We operate honestly and transparently, in full compliance with all laws and regulations, as we provide responsible and much needed access to credit for hardworking Americans.”
OneMain reached a settlement with the CFPB in May 2023 in which the lender paid $20 million in redress and penalties to resolve the regulator’s allegations that it engaged in deceptive sales practices.
At the time of the settlement, OneMain said it was “pleased to resolve this matter related to our refunding practices for some optional products, even though we do not agree with the CFPB’s conclusions … OneMain provides valuable products to customers in a fair, transparent and responsible manner.”
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