New York Attorney General Letitia James has secured $2.4 million in debt relief and $175,000 in penalties from Monterey Finance, sending another clear signal that regulators are closely scrutinizing how alternative financing and collection practices are structured, marketed, and enforced. The settlement, announced December 23, requires Monterey to cancel all outstanding New York leases, halt collection activity, and request the removal of negative credit reporting tied to the affected accounts.
Monterey was accused of knowingly purchasing and servicing payment agreements that were presented to consumers as traditional financing, when in reality they were lease agreements carrying significant undisclosed costs. Many consumers believed they were purchasing goods or services outright, only to later discover they were leasing them and would not gain ownership without paying additional end-of-term fees. In some cases, total payments exceeded the sticker price by more than 200%.
The investigation found that Monterey worked with merchants offering “financing” at the point of sale for items ranging from furniture and auto repairs to wedding dresses and even family pets. While consumers believed they were entering installment purchase agreements, the contracts were structured as leases with upfront payments, recurring monthly charges, and final disposition or purchase fees that were not clearly disclosed at the time of sale. The OAG also cited illegal “pay-to-pay” fees that further inflated consumer costs.
Beyond contract structure, the settlement highlights problematic collection conduct. The OAG alleged that consumers were threatened with repossession or referral to a “legal department” that did not exist. In some of the most troubling examples, consumers who fell behind on payments for pets were allegedly advised to surrender the animals to shelters, despite believing they owned them.
Under the Assurance of Discontinuance, Monterey must cease collecting on all New York lease-related debt, cancel existing leases, and request deletion of negative tradelines associated with those accounts. The company is also barred from participating in leases involving services, pets, or goods with no clear residual value and must implement enhanced compliance and disclosure controls going forward.
Monterey had previously reached a settlement over similar allegations with the Massachusetts Attorney General.
