- Evansville, Indiana-based OneMain Financial will pay $20 million in redress and penalties to settle Consumer Financial Protection Bureau allegations the nonbank lender deceived customers into purchasing add-on products to receive loans, and for failing to refund interest, according to an order Wednesday.
- OneMain will pay $10 million in refunds to harmed customers and an additional $10 million penalty to CFPB’s victims relief fund, the agency said.
- OneMain said it 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 refunds affect “fewer than one percent of our customers who, within the last four years, received a refund of their premium or fee through a check rather than a statement credit after canceling an optional product within 30 days of purchase,” the lender noted in its statement.
The CFPB found that OneMain incentivized employees to upsell loans by convincing customers to add on products such as roadside assistance, identity theft protection and discounts on entertainment.
The customers were led to believe that signing up for an add-on product was imperative to receive a loan, the CFPB said. Some OneMain employees included the products in the paperwork without verbally communicating to the customer that the products were included or were optional — a practice referred to internally as “pre-packing,” the bureau said.
OneMain’s salespeople were assessed based on their sales rate and could be laid off if they did not upsell enough, the CFPB asserted.
“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 Wednesday. “We are ordering OneMain to refund borrowers it cheated and to clean up its business practices.”
The CFPB order requires OneMain to adjust its cancellation policy to make it easier to cancel products, double the refund period, and include interest in refunds after add-on product cancellations at any time.
OneMain said it would extend its 30-day full refund window for optional products to 60 days.
“OneMain provides valuable products to customers in a fair, transparent and responsible manner,” the lender said in a statement Wednesday. “We are deeply committed to our customers and doing things the right way. This resolution is consistent with our mission of improving the financial well-being of hardworking Americans.”
The CFPB alleged OneMain failed to refund interest charged to 25,000 customers who canceled purchases within the purported “full refund period.”