CFPB: Add-On Products for Loans Must Be Truly Optional

  • The CFPB issued an order against OneMain Financial, Inc. and affiliated entities for allegedly deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010 in connection with providing personal installment loans.
  • According to the order, the lender deceived consumers into signing up for optional add-on products such as roadside assistance benefits or identity theft protection in order to receive loans. In addition, despite informing borrowers that these optional add-on products could be cancelled for a “full refund” within a certain period of time, OneMain allegedly failed to refund the interest charges attributable to cancelled add-on services for 25,000 consumers.
  • The order requires OneMain to pay $10 million in redress to affected consumers and an additional $10 million penalty to the CFPB. The company is also required to adjust its cancellation policies and must provide enhanced disclosures regarding any add-on products that consumers purchase.