NEW YORK (AP) — A bipartisan group of 13 state attorneys general sued OneMain Financial on Monday, alleging the company placed unwanted additional products and other hidden costs on loans that led to higher costs for its borrowers.
The lawsuit, filed in New York, says OneMain employees steered borrowers into purchasing credit insurance and other loan-related products while making deceptive claims about whether the products were required and how they could be canceled.
The attorneys general said the conduct affected tens of thousands of borrowers and violated state consumer protection laws. The products described in the lawsuit include credit insurance that claims to pay the loan if a consumer dies or becomes unemployed, as well as products like home and auto memberships that attorneys general said are similar to AAA.
The lawsuit also alleges that the companies behind those membership-type products are owned by OneMain through a related company, and that the add-ons increase the cost of the loan. Attorneys general further alleged that OneMain does not check whether consumers already have a home or auto membership service through AAA.
In a statement, New York Attorney General Letitia James said: “OneMain targets people who are already struggling financially, saddling them with hidden fees and misleading loans to trap them in even more debt.”
OneMain, based in Evansville, Indiana, said the practices at issue were already reviewed with the Consumer Financial Protection Bureau in 2023. The company said that settlement required OneMain to repay $10 million to consumers and pay $10 million in fines and penalties for allegedly selling add-on products.
OneMain said: “The states’ allegations are simply untrue — their case is wrong on the facts and wrong on the law and attempts to re-litigate issues that were already reviewed by the Consumer Financial Protection Bureau and fully resolved. We will litigate this case vigorously and look forward to proving the truth in court.”
The company said OneMain primarily offers loans to those with subprime credit scores, meaning many of its customers are already financially struggling when they borrow. Along with New York, the other attorneys general joining the lawsuit include Colorado, Nevada, Maryland, North Dakota, Oklahoma, Washington, Wisconsin, New Jersey, South Dakota, and New Hampshire, as well as the Commonwealths of Virginia and Pennsylvania.