AG Labrador Delivers $664M Consumer Protection Settlement with Snap Finance

BOISE, ID - Attorney General Raúl Labrador announced a settlement and an Assurance of Voluntary Compliance today with 16 other attorneys general in a nearly $665 million settlement with Snap Finance. As part of the settlement, Snap Finance will automatically cancel $3.4 million in lease payments owed by 1,846 Idahoans who entered into lease-to-own agreements from 2017-2022. Those Idahoans will now be able to keep and own their merchandise with no further payments.

"Snap Finance deceived their customers with misleading business practices, expensive long-term leases, and confusing contract terms," said Attorney General Labrador. "This settlement gets money directly back to the people harmed and puts Snap Finance on a path for compliance with consumer laws across the country."

Snap Finance ("Snap") is a consumer financial services company that offers a lease-to-own (or "LTO") agreement through merchant partners rather than through its own brick-and-mortar stores like traditional rent-to-own stores. Snap's LTO product is often one of multiple purchasing options offered by a single merchant. When a customer selects the Snap LTO option, Snap purchases the merchandise from the merchant, Snap takes the title or owns the merchandise, and then Snap leases it to the customer until the customer pays off the full cost of the lease under the agreement.

AG Labrador's Consumer Protection Division investigated Snap's alleged violations of the Idaho Consumer Protection Act and found that Snap used misleading disclosures about the nature of their leasing arrangements; Snap did not allow customers to view the full terms of their contracts; customers experienced extreme communication issues when they were trying to return products; and Snap's payment terms were confusing to customers.

For example, the states asserted that some customers thought they were entering into agreements with short pay-back windows of 100 days or fewer but instead were entered into long-term contracts that ended up being more expensive. Customers were misled that leasing a product and making on-time payments could increase their credit score; but that was not the case. The states investigated potential bad debt collection practices and Snap's potentially deceptive process about returning products and terminating leases.

Snap cooperated with the settling states' investigation and has agreed to the following business practice changes to address the states' concerns:

• Advertising restrictions: Snap has agreed to not use misleading slogans such as "cash payoff," "same as cash," and "no additional fees required," that potentially hid the true cost of the lease a customer was agreeing to.
• Disclosure and transparency: Snap must ensure that customers are shown the full terms and cost of a lease in accordance with state law before the lease can be signed.
• Servicing protections: Today's settlement makes it clear when Snap must repair or replace property that a customer leases and ensures Snap will do so. Additionally, Snap is prohibited from threatening seizure of a product for non-payment of a lease when it has no intent to do so.
• Disclosures about credit ratings: Snap's is prohibited from misrepresenting that applying for a lease or utilizing Snap's LTO product will help customers increase their credit score.
• Lease termination and surrender: Snap is required to provide clear disclosure of the right to terminate a lease, and Snap is prohibited from interfering with that right. Additionally, the settlement requires practical ways for a customer to return property when terminating a lease while pausing payment accrual when termination requests are processed.
• Merchant training and Compliance: Snap must meet certain initial and ongoing training requirements and provide annual compliance reports for three years.

The total lease forgiveness on behalf of 303,223 consumers in all of today's settling states is $662,102,518. Snap is also paying $2,750,000 directly to the states.

Read the settlement here.