The Consumer Financial Protection Bureau (CFPB) ordered nonbank installment lender OneMain Financial to pay $20 million in redress and penalties for deceptive sales practices and its handling of refunds relating to additional products customers were led to believe were necessary to receive a loan as part of a push for employees to reach sales targets.
“OneMain pressured its employees to load up its loans with extra charges through false promises of easy cancellation with full refunds,” CFPB Director Rohit Chopra said. “We are ordering OneMain to refund borrowers it cheated and to clean up its business practices.”
Through its investigation, the CFPB found that OneMain used deceptive practices in violation of the Consumer Financial Protection Act to lead customers 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 allegedly 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.
The bureau also found that OneMain withheld $10 million in interest charges in contradiction of its “full-refund” policy.
“OneMain is 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,” the lender said in a press release.
The order required OneMain to adjust its cancellation policies to make cancellation of add-on products easier, double the period in which a consumer can cancel an unused add-on product without cost from 30 to 60 days, and include interest in refunds after add-on product cancellations at any time.