CFPB Sues Snap Finance for Illegally Luring Americans into Expensive Financing and Bullying Borrowers Using False Threats

Jul 07, 2023

Company hid terms and conditions and deployed illegal debt collection tactics

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today sued lease-to-own finance company Snap Finance for deceiving consumers, obscuring the terms of its financing agreements, and making false threats. In a lawsuit filed in federal district court, the CFPB alleges that Snap Finance has offered and provided millions of “lease-purchase” and “rental-purchase” financing agreements in ways that have harmed consumers, including through misleading advertisements, insufficient disclosures, and interfering with consumers’ ability to understand the terms and conditions of its financing agreements. The CFPB further alleges Snap Finance’s illegal conduct continued in its servicing of those agreements, including misrepresenting consumers’ payment obligations and making false threats in collections.

“Snap Finance illegally obscured terms and conditions of their so-called 'rental purchase agreements,' which led to exorbitant charges,” said CFPB Director Rohit Chopra. “To ensure fair competition and to protect the public, the CFPB is carefully watching lending outfits operating outside of the traditional banking system.”

Snap Finance, based in Utah, is a consumer finance company that partners with thousands of merchants nationwide to offer, market, and underwrite “rental-purchase” or “lease-purchase” agreements to consumers. Snap issues financing agreements to consumers purchasing products and services such as furniture and appliances, mattresses, auto parts and repairs, auto electronics, and jewelry. Since at least January 2017, Snap Finance has sold more than three million “rental-purchase” or “lease-purchase” arrangements.

The CFPB alleges that Snap Finance’s practices violated the Consumer Financial Protection Act, the Truth in Lending Act, the Electronic Fund Transfer Act, and the Fair Credit Reporting Act. Specifically, Snap Finance allegedly harmed consumers throughout the consumer experience, from advertising to enrollment to servicing to collections by:

Snap Finance also has allegedly unlawfully conditioned its extension of credit on consumers’ repayment through preauthorized ACH debits, and failed to establish and implement reasonable written policies and procedures concerning the accuracy and integrity of the consumer information that it furnished to consumer reporting companies.

Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take enforcement action against institutions that violate federal consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB also has authority to enforce the Truth in Lending Act and its implementing Regulation Z, which seeks to ensure that credit terms are meaningfully disclosed, and the Electronic Fund Transfer Act and its implementing Regulation E, which protects consumers’ electronic fund transactions.

The CFPB is seeking monetary relief for consumers, an end to Snap Finance’s illegal practices, and a civil money penalty.

Read today’s complaint.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their companies have violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.