The Consumer Financial Protection Bureau yesterday announced a consent order with OneMain Financial that will see the company pay $20 million in fines and restitution to consumers after it was accused of deceiving borrowers into signing up for additional products and failing to refund interest charges for 25,000 customers.
A copy of the consent order can be accessed by clicking here.
It’s been kind of a rough week for OneMain, which was fined $4.25 million last Thursday for violating cybersecurity regulations in New York.
In this case, employees at OneMain tricked borrowers into believing that they could not receive a loan from the company unless they signed up for add-on products, like roadside assistance. Some employees added the paperwork for the optional products into applications and did not inform consumers that the products were optional, and when prompted to remove the products, employees were expected to make it seem difficult to do so or, in some cases, obscure written disclosures from the consumer’s view.
OneMain also told customers they would receive full refunds for the add-on products if they canceled within a certain period of time. But the company, which precomputed interest on some loans, refused to refund the interest charges that accrued for the add-on products. The CFPB claimed OneMain kept approximately $10 million in interest charges from 25,000 borrowers.
Along with paying a $10 million fine and repaying consumers the $10 million in interest charges, OneMain must also adjust its policies and procedures to make cancellation of add-on products easier, give consumers more time to cancel unused add-on products, and include any interest in refunds provided to consumers when add-on products are canceled.
“OneMain 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 company said in a released statement. “OneMain has agreed to issue interest refunds to the 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.
