More than 662 million dollars in lease payment obligations will be wiped out for consumers across 17 states following a landmark settlement with lease-to-own provider Snap Finance.
The agreement, which totals $665 million, was led by Iowa and Nebraska and draws in states from Utah to Mississippi, making it one of the most significant consumer finance enforcement actions in recent memory.
At the heart of the case were allegations that Snap Finance misled customers about the true cost and duration of their lease agreements, sometimes in fundamental ways.
Regulators claimed that some consumers believed they were entering short-term arrangements they could pay off within 100 days, only to find themselves locked into far longer and more expensive contracts.
Investigators also alleged that Snap’s advertising slogans had the effect of concealing the real cost of its products from customers who were trying to make informed financial decisions.
A further complaint centred on access to contract information, with states arguing that consumers were unable to review the full terms of a lease before they signed, and that payment structures were presented in confusing ways.
Snap was also accused of making misleading claims about credit scores, with customers allegedly told that applying for a lease or keeping up with payments could improve their credit rating.
Regulators raised additional concerns about the company’s conduct when customers tried to exit agreements, citing problems with its communications, returns process, lease termination procedures, and debt collection practices.
West Virginia consumers who entered covered agreements between 2017 and 2022 stand to benefit from $4.44 million in cancelled payments and will be permitted to keep their merchandise without owing anything further.
Beyond the $662.1 million in cancelled lease obligations, Snap will pay $2.75 million directly to the participating states as part of the settlement terms.
Utah Attorney General Derek Brown and the state’s Division of Consumer Protection were among the 17 parties to the agreement, joining states including Arkansas, Florida, Georgia, Idaho, Kansas, Kentucky, Louisiana, Missouri, and others.
Going forward, Snap Finance must satisfy both initial and continuing training requirements for its retail partners, a condition designed to prevent the same practices from recurring at the point of sale.
The company will also be required to submit annual compliance reports for a period of three years, giving regulators ongoing visibility into whether its business conduct meets the terms of the deal.