PHILADELPHIA – A Maryland-based lender deceived its loan customers by selling them insurance policies that in many cases they did not ask for or were unaware of, attorneys general of a handful of states alleged in a lawsuit filed Tuesday in federal court in Pennsylvania was filed.
The lawsuit — filed by attorneys general for the District of Columbia, New Jersey, Oregon, Pennsylvania, Utah and Washington — alleges Mariner Finance pressured its sales force to “add” additional insurance coverage for customers seeking personal and other loans.
“Mariner presents itself as a community-focused lender operating small, local offices with strong ties to its local geography. In reality, Mariner employs aggressive, high-pressure sales tactics dictated by a for-profit model that operates to the famous maxim articulated in Glengarry Glen Ross: Always Be Closing,” the approximately 100-page lawsuit reads.
The lawsuit seeks, among other things, consumer damages as well as civil penalties and the repayment of winnings.
Mariner denied the lawsuit in a statement from founder and CEO Josh Johnson, who said the firm cooperated with the investigation, providing data, documents and testimony “that clearly demonstrate the legality of their products and the important support they provide to consumers.” To take”.
“Mariner Finance has consistently denied the claims of the small multi-state coalition and will continue to defend itself as a key provider of lending options to those who may have limited access to other sources of consumer credit,” Johnson said.
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The suit paints a picture of relentless internal sales targets and pushy messages from managers urging workers to sell various types of insurance, including casualty and credit insurance. According to the lawsuit, many consumers would not expect this because Mariner poses primarily as a lender and not an insurance distributor.
Mariner operates 480 branches in 27 states and manages $2 billion in loans.
In 2019, Mariner sold nearly $122 million in bonuses and fees for the so-called add-ons, not including interest, according to the lawsuit.
The average loan size was $3,650 with an average interest rate of 28%, the lawsuit said. Additional insurance was $360 per loan, excluding interest.
“Because the premiums and fees are funded, these add-ons increase interest payments by an average of approximately $180 in interest on the loan, resulting in an additional total cost to the consumer of approximately $540,” the lawsuit states .
The lawsuit added that 80% of consumers have been charged for additional insurance coverage as of 2020.
Most consumers interviewed by state officials as part of the lawsuit said they were unaware that the additional coverage was optional, that it cost them more money, or that they even had an add-on.
In many cases, the loans were for consumers in dire financial straits who had urgent financial needs, according to Cari Fais, director of New Jersey’s consumer affairs department.
“Mariner’s practice of adding costly surcharges to ignorant consumers’ credit has undoubtedly left many already indebted families in more difficult circumstances,” Fais said in a statement.