AG Jackley Joins Multistate Lawsuit Targeting OneMain Financial’s “Bait and Switch” Loan Tactics

Northeast Radio SD News – South Dakota - South Dakota Attorney General Marty Jackley has joined a bipartisan coalition of 13 attorneys general in filing a lawsuit against OneMain Financial, Inc., alleging the lender engaged in a widespread “bait and switch” scheme that trapped subprime borrowers in debt through hidden “add-on” products.

The complaint, filed in the U.S. District Court for the Southern District of New York, accuses OneMain of covertly packing loans with expensive insurance policies and membership clubs without consumers’ informed consent.

The Cost of “Add-On Packing”

According to the lawsuit, OneMain markets high-cost subprime installment loans but often leaves borrowers with significantly more debt than they anticipated. The company allegedly “packs” these loans with optional products—such as credit life insurance, disability insurance, and “membership plans”—by misrepresenting them as mandatory or simply adding them without the borrower’s knowledge.

The financial impact on consumers is substantial:

·         In 2022, Pennsylvania borrowers were charged an average of $800 per loan for add-ons, plus an average APR of 26%.

·         New Jersey consumers saw similar averages of $826 in add-on charges.

·         One highlighted case showed a borrower who took out $2,730 in new cash but was charged $1,674 in premiums for four add-ons; when interest was factored in, the total cost for the add-ons reached $2,844.

·         Essentially, for every $100 borrowed in that instance, the consumer was charged $104 just for the add-on products.

Rushed Closings and “Legalese” Flurries

The complaint details a calculated loan closing process designed to keep consumers in the dark. Plaintiffs allege that OneMain employees often control the computer screen during closings, “blazing” through documents at a breakneck pace.

·         Speed Over Substance: In one documented instance, a consumer was rushed through 13 signature pages across nine different documents—totaling over 15,000 words—in less than three minutes.

·         Mobile Obscurity: For remote closings on smartphones, the fine print is often displayed in tiny, nearly transparent fonts that become illegible on small screens.

·         The “Three No” Rule: Internal policies reportedly pressure employees to keep pushing add-ons until a customer explicitly rejects the product at least three separate times.

“South Dakota consumers are being forced to pay for services they never agreed to and didn’t need,” said Attorney General Marty Jackley, noting that OneMain maintains branches in Rapid City, Sioux Falls, and Watertown.

Corporate Incentives Over Consumer Value

The lawsuit alleges that this conduct is driven by a compensation system that rewards employees for “add-on” sales while penalizing them if a customer cancels a policy. Branch and District managers reportedly receive “overwrite commissions” based on the volume of non-credit products sold by their subordinates.

Meanwhile, the actual value of these products to the consumer is described as minimal. In 2022, OneMain’s “loss ratio” (the ratio of claims paid to premiums collected) for involuntary unemployment insurance in Pennsylvania was a mere 6%, far below the 60% minimum recommended by the National Association of Insurance Commissioners.

The Multistate Coalition

South Dakota is joined in this action by the Attorneys General of:

·         New York, Pennsylvania, Colorado, and Maryland.

·         Nevada, New Hampshire, New Jersey, and North Dakota.

·         Oklahoma, Virginia, Washington, and Wisconsin.

The plaintiffs are seeking a permanent injunction, full restitution for impacted borrowers, and significant civil penalties.