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Financial Services Law Insights and Observations

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  • States sue installment lender for hidden add-on products

    State Issues

    On August 16, a multistate lawsuit led by the Pennsylvania attorney general was filed against a subprime installment lender for allegedly charging consumers for hidden add-on products without their consent. According to the Pennsylvania AG’s press release, consumers believed they had entered into agreements to borrow and repay, over time, a fixed loan amount when allegedly the lender “added hundreds to thousands of dollars to the total amount a consumer owed.” Among other things, the complaint claimed the lender’s alleged “aggressive, high-pressure sales tactics” were “dictated by a profit-driven model,” and that its loans and aggressive sales tactics targeted the most vulnerable borrowers (often subprime and deep subprime borrowers that already carry significant credit card, installment loan, and/or student loan debt) by offering them “small dollar personal loans with high interest costs.” Additionally, the complaint contended that the lender’s corporate policies and practices resulted in employees charging consumers for add-on products they did not know about and did not consent to buy, and that employees were encouraged to perpetrate the unlawful conduct by being rewarded for maximizing add-on charges. The complaint seeks restitution, repayment of unlawfully obtained profits, civil penalties, rescission or reformation of all contracts or loan agreements between the lender and affected consumers, and injunctive relief.

    State Issues State Attorney General Enforcement Consumer Finance Predatory Lending Add-On Products Installment Loans

  • Florida Attorney General settles with car rental company for misleading fee disclosures

    State Issues

    On January 22, the Florida Attorney General announced a settlement with a car rental automotive group resolving allegations the company did not adequately disclose add-on fees for cashless tolls and other related add-on charges. According to the settlement, the Attorney General launched an investigation after receiving consumer complaints alleging the company did not clearly disclose that consumers would be charged $15 per cashless toll, in addition to the actual toll fees. Additionally, consumers who opted into an add-on product that would allow them to go through cashless tolls without penalty alleged the company misled them regarding that product’s fees. The settlement requires the company to (i) clearly and conspicuously disclose all fees regarding cashless tolls or associated products within written agreements; (ii) provide clear disclosures regarding fees on their website, online reservation system, confirmation emails and at the rental counters; (iii) refund fees paid for tolls or the associated add-on product to consumers who were charged between January 1, 2011 and January 7, 2019, and who submit claim forms; and (iv) provide accurate disclosures on damage waivers. The settlement also prohibits the company from charging consumers for a higher car class when the car class reserved by a consumer is unavailable.

    State Issues Courts Disclosures State Attorney General Settlement Add-On Products

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