AG Henry Secures $11 Million Settlement with Predatory Rent-to-Own Lender that Targeted Low-Income Borrowers

May 15, 2023 | Topic: Consumers

$11 Million Settlement also Includes Debt Relief & Restitution for Certain Pennsylvanians

HARRISBURG– Attorney General Michelle Henry today announced a settlement of a lawsuit filed against Snap Finance LLC and its affiliates for $11.4 million.

According to the lawsuit, the lending company preyed on low-income Pennsylvanians who could not make large purchases without financing, disguising one-year rent-to-own agreements as “100-Day Cash Payoffs,” then concealing balances owed and engaging in deceptive collection practices. The company also used a web-based portal for creating and signing contracts, making it easy for retailers to fraudulently sign the agreements on behalf of the consumers instead of consumers personally signing.

The Office of Attorney General reached a settlement — with $7,300,000 going to consumers as cash restitution payments and another $3,150,000 as consumer debt relief — with Snap Finance and its affiliates, Snap RTO LLC, Snap Second Look LLC, and Snap Finance Holdings, LLC.

“This lender preyed upon Pennsylvanians who need to pay for big ticket, but necessary purchases over time,” Attorney General Henry said. “The consumers were presented with short pay-back periods, but after signing on the dotted line, were instead locked into long-term, high-interest rate loans. If you mislead Pennsylvanians to maximize your bottom line, we will hold you accountable.”

Snap had a large presence across the country, including in Pennsylvania, where it has entered into tens of thousands of retail-purchase agreements with Pennsylvania consumers since 2014.

According to the lawsuit, consumers were locked into binding agreements, but Snap Finance misled consumers about the basics of the contracts. Snap Finance advertised its rental-purchase agreements and retail-installment contracts as “100-Day Cash Payoffs” when in reality, consumers were signing a 12-month agreement that included hefty leasing fees equivalent to 152% APR interest.

Pennsylvanians receiving restitution and relief had already satisfied the cash price, the sales tax on the cash price, and the processing fees associated with their purchase – yet still owed Snap Finance a balance. Due to this settlement, thousands of consumers will receive restitution and hundreds more will have their balances reduced to zero.

The remaining balance of the $11.4 million settlement will be collected in civil penalties and costs incurred by the Office of Attorney General.

The Consent Petition was filed in the Court of Common Pleas of Philadelphia County Friday and is waiting for the Court’s approval. This case was litigated by Assistant Director Jill Ambrose and Deputy Attorney General Christopher Dey with assistance from Senior Civil Investigators Melissa Ritzman and Alison Calderone.

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