Attorney General Ellen Rosenblum today announced a multistate lawsuit against lending company Mariner Finance for violating the federal Consumer Financial Protection Act. The company is alleged to have hidden add-on products that consumers didn’t know about or agree to purchase. Customers of Mariner Finance assumed they had entered into an agreement to borrow a certain amount of money and to repay it over time. These hidden add-on products meant Mariner added to the total amount a consumer owed, which amounted to hundreds of millions of dollars nationwide.
This filing marks the first time the Oregon Department of Justice has filed a federal lawsuit under the Consumer Financial Protection Act.
Mariner, which describes itself on its website as providing “hard-working consumers responsible access to credit through respectful, compassionate, and efficient service” began selling loans in Oregon with add-ons in September 2021. Over the past year, Mariner has made 371 direct loans by phone to Oregonians: 88 of these loans have included add-ons.
“Mariner pressures and incentivizes its employees to deceive borrowers into paying hundreds of dollars for insurance products that they do not need or want,” said Attorney General Rosenblum. “The company pulls off this deception using an electronic loan document process that rushes borrowers through the signing process. Even though Mariner doesn’t have physical locations in Oregon, they still solicit business with Oregonians by mail, by phone, and online. I hope this lawsuit sends a clear message to Mariner and other installment lenders that insurance packing, loan flipping, and other predatory lending practices will not be tolerated in Oregon or anywhere.”
Specifically, the lawsuit alleges that Mariner Finance employees either don’t mention the add-on products to consumers or blatantly misrepresent them. Mariner Finance employees also claim the products are required to obtain a loan, even though they are not required. Some consumers were told by Mariner Finance that add-ons were free or much cheaper than they were, while other consumers who rejected the add-on products were charged for them anyway. The lawsuit also alleges that Mariner Finance engages in aggressive sales tactics to extend credit to new borrowers.
Mariner Finance is owned by a Wall Street private equity fund managed by Warburg Pincus LLC. When Warburg Pincus bought Mariner Finance, it had 57 branches in seven states. Today, Mariner Finance has over 480 branches in 27 states and manages over $2 billion in loans.
The multistate lawsuit asks the court to order:
- Full restitution to all borrowers affected by Mariner’s unlawful practices
- Repayment by Mariner of any unlawfully gained profits
- Civil penalties
- Rescission or reformation of all contracts or loan agreements between Mariner and consumers affected by the company’s unlawful practices
- Mariner to stop charging consumers for add-on products and cease other harmful practices
In addition to Oregon, today’s lawsuit was joined by the District of Columbia, New Jersey, Pennsylvania, Utah, and Washington.