N.J. sues personal loan firm for ‘exorbitant’ add-on fees

New Jersey joined a bipartisan suit against personal-loan firm OneMain Financial on Monday, accusing the company of issuing “exorbitantly priced” loans stuffed with hundreds of millions in junk fees. 

The Attorney General’s Office said OneMain operates 26 branches in New Jersey and sold about $27 million in add-on fees in the Garden State between 2021 and 2022. The states said these fees were often hidden from customers or sneaked into their loans without consent, and the plaintiff states said the fees are harming the affordability of families throughout the country.

“New Jerseyans in need of financial assistance came to OneMain for help, but they were sold expensive, inflated loan products they didn’t want and couldn’t afford,” Attorney General Jennifer Davenport said. “Consumers are struggling under the weight of an affordability crisis, and lenders should not be financially rewarded for multiplying their customers’ debt with expensive products they do not want or need.”

The office said the average add-on cost $826 for customers, yet rarely offered a benefit to the purchaser. The suit alleges that even when customers spotted the add-ons and tried to decline, the company’s policy was to wait until customers say “no” three times before removing the add-ons. 

In a statement, OneMain called the lawsuit meritless and said the issue would not change how they conduct business.

“The states’ allegations are simply untrue — their case is wrong on the facts and wrong on the law and attempts to relitigate issues that were already reviewed by the Consumer Financial Protection Bureau and fully resolved,” the company said. “We operate honestly and transparently, in full compliance with all laws and regulations, as we provide responsible and much needed access to credit for hardworking Americans.”

New Jersey and the 13 other states filed the suit in the federal Southern District of New York.

“The add-on fees and interest charged by OneMain were rarely, if ever, adequately disclosed or explained, and consumers wound up being charged for products they never agreed to, much less understood,” said acting Department of Community Affairs Director Jeremy E. Hollander. “Businesses operating in New Jersey must comply with the laws and regulations that protect our consumers against unconscionable and abusive sales and advertising practices. Such conduct will not be allowed to go unchecked in New Jersey.”