Payments of $20 million in penalties and in redress to consumers for deceptive sales practices was ordered against an Indiana firm described as a nonbank personal loan installment lender, the federal consumer financial protection agency said Wednesday.
The Consumer Financial Protection Bureau (CFPB) said it issued the ordered the payments against One Main Financial of Evansville, Ind., for failing to refund interest charged to 25,000 customers who cancelled purchases within a purported “full refund period,” and for deceiving borrowers about needing to purchase add-on products to receive a loan.
The bureau said the firm would pay $10 million in refunds to consumers harmed by its actions, and a $10 million penalty to the CFPB’s victims relief fund.
In addition, CFPB said, it is requiring OneMain to stop any unlawful activities, adjust 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.
CFPB asserted that OneMain expected its workers to “upsell” borrowers on all loans, and incentivized them to push more products. Company training materials, the bureau said, directed workers to upsell even when consumers had already declined the products on previous loans. Salespeople were evaluated on the basis of their sales rate and could even be fired if they did not upsell enough, the bureau charged.
The bureau described OneMain as one of the largest non-depository personal installment lenders in the country, with a network with more than 1,400 branches across 44 states. The company offers loans and makes extra profits by upselling borrowers with products such as roadside assistance, unemployment coverage, and identity theft coverage, CFPB said.
CFPB Orders Installment Lender OneMain to Pay $20 Million for Deceptive Sales Practices