The Attorney General of Tennessee last week announced an $11.1 million settlement with Mariner Finance that resolves allegations that the company used deceptive practices involving optional add-on products and refinancing tactics that allegedly increased consumers’ debt burdens.
According to the attorney general, Mariner allegedly charged consumers for optional products that borrowers either did not fully understand or, in some cases, may not have knowingly agreed to purchase. Those products allegedly included credit insurance and other ancillary offerings that increased loan balances by hundreds of dollars. The state also alleged the company used aggressive tactics to encourage additional borrowing and refinancing activity.
The consent judgment imposes requirements around how optional products are discussed, disclosed, sold, canceled, and monitored going forward. Mariner must now provide consumers with written loan approval disclosures before discussing optional products and must clearly disclose that those products are not required to obtain a loan. The agreement also prohibits the company from marketing lower interest rates as a benefit of purchasing optional products and bars employees from attempting to “save” optional products when consumers seek cancellation.
The settlement also prohibits compensating employees based on the number or dollar value of optional products sold and requires enhanced auditing of calls, customer surveys, complaint monitoring, and training protocols. Mariner is also required to attempt collecting payments before presenting refinancing as a solution for delinquent borrowers and requiring refinancing discussions to include other available workout options.
Financially, the settlement includes $1 million in restitution and approximately $10.1 million in debt cancellation for covered Tennessee consumers. Mariner must also cease collection efforts on covered debts and request updates to affected consumers’ credit reporting tradelines where balances are reduced or eliminated.
