New York Attorney General Letitia James and 12 other attorneys have filed a lawsuit against OneMain Financial for what they say is a scheme to trap consumers in debt.
James and the coalition of attorneys general allege OneMain is misleading its customers and trapping them into expensive loans and hidden costs. According to the complaint, OneMain exploits its customers by loading their already high-cost loans with expensive and often useless products like insurance policies. The coalition said in its suit that OneMain adds these products to its loans without consumers’ knowledge or by misleading them about the products’ terms or costs.
As a result, customers face hundreds of thousands more for their loans than they expect and many are forced into a vicious cycle to refinance into more expensive loan packages in order to keep up with payments, at which point the company misleads them again and packs on more products to the loans, the attorneys general said.
“OneMain targets people who are already struggling financially, saddling them with hidden fees and misleading loans to trap them in even more debt,” James said. “These predatory tactics are driving up costs for working families across New York and the country. Today I am taking action to stop OneMain’s illegal and abusive business model and get New Yorkers their money back.”
James and the attorneys general of Colorado, Maryland, Nevada, New Hampshire, New Jersey, North Dakota, Oklahoma, Pennsylvania, South Dakota, Virginia, Washington, and Wisconsin, said OneMain’s practices violate state and federal consumer protection laws, including those against illegal, fraudulent, deceptive, unfair, and abusive conduct and false advertising. The lawsuit is seeking restitution for consumers, and disgorgement of all unlawful profits. The suit also seeks a court order prohibiting OneMain from continuing its illegal practices and ordering OneMain to withdraw any negative information reported to credit agencies that may affect customers’ credit scores and to abandon any legal proceedings against customers related to their add-on products.