The Consumer Financial Protection Bureau yesterday filed a lawsuit against a consumer finance company, accusing it of a number of violations, including making threats to take actions against consumers when collecting on delinquent accounts that it did not intend to take and not having policies and procedures concerning the accuracy of information it was furnishing to the credit reporting agencies, among other allegations.
A copy of the complaint, filed against Snap Finance, can be accessed by clicking here.
Snap Finance works with merchants nationwide to underwrite rental-purchase or lease-purchase agreements for purchases like furniture, mattresses, appliances, electronics, and jewelry. In the past six years, the company has sold more than 3 million such agreements.
The complaint accuses Snap Finance of doing things it shouldn’t from the beginning to the end of the process — starting with how it advertised its products to how they were serviced and collected. Applications were completed on a portal or computer at the merchant, even though the merchants allegedly were not provided with training materials about the financing products until 2020. The company also advertised a 100-Day Cash Payoff product that made it appear as though the financing was only for 100 days, when in fact the consumers had been entered into a 12-month payment program, which involved total payments that were more than double the price of the merchandise being financed.
The company also was accused of failing to provide required disclosures, requiring consumers to pay a fee before seeing the terms of their agreement, and misleading consumers into thinking they could not terminate their agreement or surrender the merchandise.
When consumers missed or stopped making payments, they would receive demand letters for payment or return of the merchandise and if the consumer failed to respond, “further action” may be taken. But going back to 2017, the company has not forcibly repossessed merchandise or taken legal action against any consumer for not paying their bills.
Snap also allegedly had one internal policy document related to its furnishing responsibilities and it failed to include any direction or steps that employees should take to ensure the information it was furnishing was accurate, or how to conduct reasonable investigations of disputes.
The company is accused of violating the Consumer Financial Protection Act, the Electronic Funds Transfer Act, the Truth-in-Lending Act, and the Fair Credit Reporting Act.
