Summary
A bipartisan group of 13 U.S. attorneys general sued OneMain Financial on Monday, alleging the installment lender added unwanted products and other hidden costs to loans that drove up what borrowers ultimately paid. The complaint, filed in New York, accuses OneMain of steering borrowers into credit insurance and other loan-linked add-ons while allegedly misrepresenting whether those products were required and how consumers could cancel them.
New York Attorney General Letitia James said in a statement that “OneMain targets people who are already struggling financially, saddling them with hidden fees and misleading loans to trap them in even more debt,” describing the practices as designed to deepen borrowers’ financial hardship. The lawsuit alleges the conduct affected tens of thousands of borrowers and violated state consumer protection laws.
According to the complaint, OneMain employees steered borrowers into purchasing credit insurance, which is intended to pay the loan if a consumer dies or becomes unemployed, along with other products tied to the loan. The lawsuit says those add-ons include memberships that resemble services offered by companies such as AAA, and it alleges OneMain controls or owns related companies that provide the products.
The states allege that the added products increased the cost of borrowers’ loans. They also say OneMain did not check whether a consumer already had comparable home or auto membership coverage through AAA before selling similar products.
OneMain, based in Evansville, Indiana, said it disputes the allegations and that the matter has already been reviewed in a 2023 settlement process with the Consumer Financial Protection Bureau. The company said the CFPB-related settlement required OneMain to repay $10 million to consumers and pay $10 million in fines and penalties over alleged add-on product sales.
In response to the new lawsuit, OneMain said the states’ allegations were “simply untrue” and that its challenged practices were already resolved federally. The company said, “We will litigate this case vigorously and look forward to proving the truth in court.”
OneMain primarily offers loans to consumers with subprime credit scores, meaning many customers are already facing financial strain when they seek installment credit. The complaint’s central allegations focus on how add-on products were presented during the loan process and the effect those products had on borrowers’ total costs.
The attorneys general joining the lawsuit include New York and, in addition to that state, Colorado, Nevada, Maryland, North Dakota, Oklahoma, Washington, Wisconsin, New Jersey, South Dakota, and New Hampshire, along with the Commonwealths of Virginia and Pennsylvania.