InfoBytes Blog
CFPB announces consent order against leasing company
On September 11, the CFPB issued a consent order against an Ohio-based nonbank consumer finance company (respondent), for deceptive practices related to consumer leasing agreements. The CFPB, along with 41 states and the District of Columbia, addressed respondent’s conduct in a parallel multi-state settlement. According to the consent order, respondent, operating through major retailers, allegedly concealed contract terms and costs from consumers, leading them to unknowingly enter into costly leasing agreements. The Bureau claims that deceptive practices left consumers unable to return products and burdened with unexpectedly high payments, violating the CFPA and Regulation M, implementing the Consumer Leasing Act.
The consent order states that respondent concealed lease agreement terms, often providing consumers with copies of the agreements after transactions or relying on verbal descriptions from store employees. Consumers were also allegedly trapped by unreasonable return practices, as respondent did not accept returns for many items, forcing consumers to pay excessively high prices. Additionally, the CFPB claimed respondent failed to provide legally required disclosures, leading to revenues of approximately $192 million from around 325,000 consumers.
As a result of the consent order, respondent is permanently prohibited from offering consumer leases and is required to close all outstanding consumer accounts. Consumers will be allowed to keep leased merchandise without further payment, amounting to approximately $33.6 million in released payments. Respondent must also pay a $2 million penalty, with $1 million going to the CFPB's victims’ relief fund and the remaining $1 million allocated to the participating states.
The CFPB's director, Rohit Chopra, emphasized the significance of the order, stating that it permanently bans respondent from engaging in such agreements. The alleged deceptive practices, which occurred from January 1, 2015 to the present, and allegedly affected over 1.8 million consumers who entered into financial agreements with the company covering a wide range of items, from auto parts to furniture and jewelry. Respondent neither admitted nor denied the CFPB’s claims.