The Attorney General of Pennsylvania has announced an $11 million settlement with a rent-to-own lender accused of engaging in predatory practices against low-income borrowers and engaging in deceptive collection practices.
A copy of the settlement with Snap Finance can be accessed by clicking here.
The lawsuit accused the company of disguising one-year rent-to-own agreements as “100-day cash payoffs” when in reality consumers were signing 12-month financing agreements that included “hefty” leasing fees equivalent to 152% APR interest, according to the AG’s office. The company also used a portal to create and sign contracts, which allowed retailers to fraudulently sign agreements on behalf of consumers instead of the consumers signing the agreements themselves.
“This lender preyed upon Pennsylvanians who need to pay for big ticket, but necessary purchases over time,” said Attorney General Michelle Henry, in a statement. “The consumers were presented with short pay-back periods, but after signing on the dotted line, were instead locked into long-term, high-interest rate loans.
Of the $11 million being paid, $7.3 million will go back to customers in the form of restitution payments and $3.15 million will be earmarked for consumer debt relief.
The lawsuit was originally filed in 2020.
The company has agreed to not represent or imply that not paying a debt owed or alleged to be owed to it will result in the seizure, attachment or sale of any property that is subject of the debt unless such action is lawful and the company intends to take such action. This includes a prohibition on telling consumers — without any attempt to seize, attach, or sell property — that they should come current in order to “continue to enjoy the merchandise,” according to the settlement. The company is also prohibited from collecting any amount, including interest, fees, charges, or expenses incidental to the principal obligation, unless that amount is expressly authorized by the agreement creating the obligation or permitted by law.
