CFPB Sues Lease-to-Own Company Snap Finance

The Consumer Financial Protection Bureau (CFPB) has sued lease-to-own finance company Snap Finance, alleging deception, consumer law violations and making false threats.

The CFPB is now seeking monetary relief, an end to the alleged illegal practices and a civil money penalty, the bureau said in a Wednesday (July 19) press release.

Reached by PYMNTS for comment, a Snap Finance spokesperson said in an emailed statement that the company disagrees with the CFPB’s assertions and plans to vigorously defend itself against these “exaggerated allegations.”


“We believe Snap Finance’s practices have been transparent and compliant with both the letter and spirit of the law,” the company said in the statement. “Our customers are provided with clear summaries of their rights in our application flow and benefit from our best-in-class support. We pride ourselves on being the industry leader in terms of transparency and fairness through all stages of a customer’s relationship with Snap.”

According to the CFPB, Snap Finance offered and provided millions of “lease-purchase” and “rental-purchase” financing agreements with misleading advertisements, failing to disclose the true costs to consumers, and interfering with the understanding of the terms and conditions of the financing agreements.

“Snap Finance illegally obscured terms and conditions of their so-called ‘rental purchase agreements,’ which led to exorbitant charges,” CFPB Director Rohit Chopra said in the press release.

Among the charges are that Snap Finance required merchants to provide details of its financing agreements to consumers, but the company allegedly provided no written training materials on this topic to its merchant partners for many years, according to the press release.

Another charge is that Snap Finance reportedly made false and misleading statements to consumers, portraying they could not terminate their agreement or surrender merchandise back to the lender, the release said.

A third charge is that the company illegally employed debt collection practices, threatening actions and misrepresenting consumers’ payment obligations under their agreement, per the release.

“To ensure fair competition and to protect the public, the CFPB is carefully watching lending outfits operating outside of the traditional banking system,” Chopra said in the release.

This news comes on the heels of several other actions undertaken by the CFPB.

On July 11, the bureau ordered Bank of America to pay more than $250 million in penalties and restitution to consumers. The CFPB said the move came in response to the bank’s “systematically double-dipping” on fees imposed on customers with insufficient funds, failure to pay reward bonuses explicitly promised to credit card customers, an unauthorized opening of accounts with customers’ sensitive personal information.

Days earlier, on July 7, the CFPB and two other federal agencies launched an inquiry into “high-cost specialty financial products” used to pay for routine medical care.