The Consumer Financial Protection Bureau (CFPB) has detailed enforcement action against nonbank personal loan installment lender OneMain Financial for allegedly violating consumer financial laws.
“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.”
The CFPB indicated it has ordered OneMain Financial to pay $20 million in redress and penalties for failing to refund interest charged to 25,000 customers who canceled purchases within a purported full refund period and for deceiving borrowers about needing to purchase add-on products to receive a loan.
The CFPB alleges OneMain Financial expected its employees to upsell borrowers on every loan. Employees were incentivized to push more products, and company training materials directed them to upsell them even when consumers had already declined the products on previous loans.
According to the CFPB, OneMain will pay $10 million in refunds to consumers it harmed and an additional $10 million penalty to the CFPB’s victims’ relief fund.
In accordance with the order, OneMain Financial will be required to stop its unlawful activities, adjust its 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.