AG Brown sues OneMain Financial for alleged bait-and-switch lending scheme

Attorney General Nick Brown and 12 other attorneys general today announced a lawsuit against OneMain Financial, Inc. and its related entities, alleging that the installment lender charged consumers nationwide hundreds of millions of dollars in hidden fees and interest.

The financial hit for Washingtonians is substantial. OneMain has sold more than $100 million worth of add-on products and entered into more than 200,000 loans with Washingtonians since 2019.

OneMain Financial advertises high-cost installment loans with "clear, upfront terms," but it packs those loans with hidden insurance policies and other add-on products that inflate the cost of the loans by hundreds or thousands of dollars. OneMain rushes consumers through fine-print loan documents containing the dense terms and conditions of the add-ons. OneMain often hides the add-ons, sometimes misrepresents them, or even charges consumers who outright reject them.

"OneMain lures people in with promises of straightforward credit terms, but leaves Washingtonians saddled with extra debt they didn't want and never agreed to," Brown said. "Paying the bills is already a balancing act for many people across our state. That's why I will do all I can to hold predatory lenders accountable and fight for the rights of consumers in Washington."

The lawsuit alleges the following about OneMain's bait and switch scheme:

• OneMain does not advertise that it sells add-on products, so consumers who come through its doors have no reason to expect the company to push these products.
• OneMain has written policies that purport to prevent unlawful add-on packing, but the company's actual processes operate nothing like its written policies.
• OneMain puts financial pressure on its employees to pack add-ons.
• OneMain rushes consumers through a loan closing process in which its employees often control the computer screen that shows the loan documents. This does not allow the consumer time to review each page of the loan application as the employee scrolls through the contract.
• OneMain buries the fine print that mentions the add-on products inside 50 pages of legalese, which OneMain prevents consumers from reading before accepting the loan contract.
• OneMain often closes loans on smart phones, where already small print shrinks to an illegible size.
• OneMain also misleads consumers when encouraging them to refinance their loans by tacking on add-on products and by hiding key terms.

Brown and the coalition are seeking restitution for consumers who were unlawfully charged for these add-on products, penalties for violating state laws, and to release 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 impact its customers' credit scores and to abandon any legal proceedings against customers related to the add-on loan products.

Any consumers who believe that they or someone they know may be a victim of the business practices of OneMain Financial should file a complaint with the Office of Attorney General online or by calling 1-800-551-4636.

This lawsuit is being led by the attorneys general of Pennsylvania and New York. In addition to AG Brown, the coalition includes the attorneys general from Colorado, Maryland, Nevada, New Hampshire, New Jersey, North Dakota, Oklahoma, South Dakota, Virginia, and Wisconsin.

A copy of the complaint is available here. A copy of Exhibit A showing screenshots from OneMain's website is available here.

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