TRENTON, N.J. — New Jersey Attorney General Jennifer Davenport and the state Division of Consumer Affairs have filed a lawsuit against OneMain Financial, accusing the lender of charging borrowers hundreds of millions of dollars in hidden fees by adding costly products to installment loans.
The lawsuit, filed with a bipartisan coalition of 12 state attorneys general, alleges that OneMain Financial packaged expensive add-on products into loans, sometimes without borrowers’ knowledge or consent, significantly increasing borrowing costs.
According to the complaint, OneMain Financial — one of the nation’s largest subprime installment lenders — operates 26 branches in New Jersey and sold approximately $27 million in add-on products in the state between 2021 and 2022.
Officials allege the company promoted its loans as having “clear, up-front terms,” while embedding costly add-on fees within loan agreements.
“To make life more affordable, we will hold accountable any business that takes advantage of hardworking New Jerseyans by charging them hidden junk fees and tricking them into purchasing exorbitantly priced products. That’s exactly what OneMain did. 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,” said Attorney General Davenport. “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 lawsuit claims borrowers were often rushed through in-person loan closings and given limited time to review loan documents, while remote closings sometimes displayed disclosures in small or difficult-to-read text.
Investigators allege that when customers attempted to decline add-on products, company representatives continued to pressure them until they refused multiple times.
According to the complaint, the add-on products — which include credit insurance and membership programs such as “Auto Plus” — often provided limited benefit to borrowers but generated substantial profits for the company through commissions and related insurance revenues.
Officials said the average cost of these add-ons for New Jersey borrowers was about $826.
“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 DCA 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.”
The lawsuit seeks refunds for affected consumers, civil penalties and the return of profits the states allege were improperly obtained.
State officials are also asking the court to order OneMain to stop the alleged practices, remove any negative credit reporting tied to the add-on products and drop collection actions related to those charges.
The complaint encourages consumers who believe they may have been affected to file a complaint through the New Jersey Division of Consumer Affairs.
In addition to New Jersey, attorneys general from Pennsylvania, New York, Colorado, Maryland, Nevada, New Hampshire, North Dakota, Oklahoma, South Dakota, Virginia, Washington and Wisconsin joined the lawsuit.
