Deceptive Add-Ons: OneMain Financial’s $20 Million Class Action Woe
Imagine needing a loan for that much-desired home improvement project. You finally find a lender, get approved, then BAM! Unexpected fees for credit insurance or other products you never wanted get tacked on. Frustrating, right? Well, that’s exactly what happened to thousands of OneMain Financial customers, leading to a whopping $20 million class action lawsuit settlement.
Here’s the breakdown: The Consumer Financial Protection Bureau (CFPB) found OneMain guilty of deceptive sales practices [1]. They misled borrowers into believing these add-on products were mandatory for loan approval. Additionally, even if customers cancelled the unwanted extras within the promised “full refund” window, OneMain failed to return the interest accrued on those fees [1]. That’s like paying for a gym membership you never use, and still getting charged a processing fee!
This case highlights a common issue in the financial industry: hidden fees and deceptive sales tactics. Just like with airline baggage fees, these extras can significantly bump up the final cost of your loan.
So, what can you do as a borrower? Here are some tips:
Read the fine print: Before signing any loan agreement, meticulously comb through the details. Look for sections on add-on products and cancellation policies. Don’t be afraid to ask questions!
Shop around: Get quotes from multiple lenders to compare interest rates and fees. Don’t settle for the first offer that comes your way.
Fight back: If you feel a lender has misled you, don’t hesitate to file a complaint with the CFPB [2]. They have the authority to investigate and take action against unfair practices.
The OneMain Financial case serves as a cautionary tale for both borrowers and lenders. Transparency and honesty are crucial in building trust within the financial system. By staying informed and assertive, you can protect yourself from becoming the next victim of a deceptive loan scheme.
Here are some Frequently Asked Questions (FAQs):
What was the settlement amount in the OneMain Financial case?
$20 million, with $10 million going towards refunds for affected customers.
What is the Consumer Financial Protection Bureau (CFPB)?
A government agency established to regulate financial institutions and protect consumers .
How can I file a complaint with the CFPB?
You can submit a complaint online at https://www.consumerfinance.gov/complaint/ or by calling 1 (855) 411-CFPB (2372).
What are some red flags to watch out for when taking out a loan?
Mandatory add-on products, unclear terms and conditions, and high-pressure sales tactics are all cause for concern.
Should I always get credit insurance with my loan?
Not necessarily. Shop around and compare prices before you buy. Consider your financial situation and risk tolerance before making a decision.
What happens if I can’t afford to repay my loan?
Contact your lender immediately to discuss options. There may be hardship programs available to help you get back on track.
By staying informed and empowered, you can navigate the loan market with confidence and avoid falling prey to deceptive practices.
Sources:
[1] Consumer Financial Protection Bureau: https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-installment-lender-onemain-to-pay-20-million-for-deceptive-sales-practices/
[2] Consumer Financial Protection Bureau: https://www.consumerfinance.gov/complaint/