Lenders have accumulated insurance plans on involuntary borrowers

PHILADELPHIA (AP) — A Maryland-based lender tricked customers into selling them insurance policies they didn’t ask for or weren’t aware of in many cases, attorneys general have claimed. from a handful of states in a lawsuit filed Tuesday in federal court in Pennsylvania.

The lawsuit – brought by the attorneys general of the District of Columbia, New Jersey, Oregon, Pennsylvania, Utah and Washington – alleges that Mariner Finance pressured its sales force to “adds” additional insurance coverage to customers seeking personal and other loans.

“Mariner markets itself as a community-focused lender operating small, local branches that are closely tied to its local geography. In reality, Mariner deploys aggressive, high-pressure sales tactics dictated by a profit-driven model that operates according to the famous maxim set forth in Glengarry Glen Ross: Always Be Closing,” the roughly 100-page lawsuit states.

The lawsuit seeks restitution for consumers as well as civil penalties and refund of profits, among other consequences.

Mariner disputed the lawsuit in a statement from Founder and CEO Josh Johnson, who said the company cooperated with the investigation and provided data, documents and testimonials “that clearly demonstrate the legality of its products and the support they provide to consumers”.

“Mariner Finance has continually challenged the claims the Small Multistate Coalition has made and will continue to defend itself as an important provider of credit options to those who may have limited access to other sources of credit at the consumption,” Johnson said.

The lawsuit paints a picture of relentless internal sales targets and push messages from managers urging workers to sell various types of insurance, including accident insurance and credit insurance. That’s not something many consumers would expect, according to the lawsuit, since Mariner markets itself primarily as a lender, not an insurance sales company.

Mariner operates 480 branches in 27 states and handles $2 billion in loans.

In 2019, Mariner sold nearly $122 million in bounties and fees for so-called add-ons, not including interest, according to the lawsuit.

The average loan size was $3,650, with an average rate of 28%, according to the suit. The added insurance accounted for $360 per loan, excluding interest.

“Because the premiums and fees are funded, these additions increase interest payments by an average of about $180 in loan interest, for a total additional cost to the consumer of about $540,” says the court case.

The lawsuit added that 80% of consumers, as of 2020, were charged for additional insurance coverage.

Most consumers interviewed by state officials in the lawsuit said they were unaware that additional coverage was optional, that it cost more, or that they had a top-up.

The loans, in many cases, were for financially distressed consumers who had pressing financial needs, according to Cari Fais, who heads New Jersey’s consumer affairs division.

“Mariner’s practice of adding costly add-ons to involuntary consumer loans has undoubtedly thrown many already debt-ridden families into more difficult circumstances,” Fais said in a statement.

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