TRENTON – Acting Attorney General Matthew J. Platkin announced today the filing of a multistate lawsuit against Maryland-based Mariner Finance for widespread violation of consumer protection laws, including adding costly, hidden “add-on” products such as credit insurance to the loans of consumers who never agreed to purchase them.
The lawsuit alleges that non-bank lender Mariner routinely charged consumers for add-on loan products without mentioning them, or forged ahead and signed consumers up for the add-ons despite their stated rejection of such offers – leading to hundreds-to-thousands of dollars in additional debt.
As the complaint alleges, Mariner took particular advantage of vulnerable consumers with limited access to credit who were already struggling with debt, and who had few or no other options available to obtain a badly needed personal loan.
The complaint further alleges that Mariner incentivized its employees to attach add-ons to consumer loans with bonuses, and that the company punished managing employees whose branch locations did not meet Mariner’s minimum sales goals for the add-ons.
Nationwide, Mariner’s alleged practice of attaching these hidden “add-on” charges amounted to hundreds of millions of dollars in overall additional debt for consumers.
“Mariner’s alleged conduct is deeply disturbing, especially its exploitation of individuals and families in need – people who were already struggling with debt and had few places to turn for help,” said Acting Attorney General Platkin. “It is difficult to imagine a business model built on such predatory practices, but one thing is for certain – such lending practices are unlawful in New Jersey, and we will hold accountable any business that engages in such conduct.”
“Our investigation found a pattern of unacceptable conduct on the part of Mariner – conduct that, in particular, exploited vulnerable consumers who often had a pressing need for a personal loan,” said Division of Consumer Affairs Director Cari Fais. “Mariner’s practice of attaching costly add-ons to the loans of unwitting consumers doubtless plunged many already debt-ridden families into more difficult circumstances. Here in New Jersey, this kind of predatory lending conduct cannot, and will not, be tolerated.”
Today’s lawsuit alleges that Mariner employees either did not mention the add-on products to consumers when processing their loans, or blatantly misrepresented them. For example, in cases where Mariner employees disclosed the add-ons, they often misrepresented to consumers that the add-ons were not optional, but rather were required in order to obtain a loan. The add-ons were not required.
In addition, some consumers were told by Mariner that the add-ons were free or much cheaper than their actual cost, while other consumers, who explicitly refused the add-on products, were charged for them anyway. The lawsuit also alleges that Mariner engaged in harmfully aggressive sales tactics to extend credit to new borrowers. For example, Mariner’s marketing heavily featured the fact that consumers can visit a Mariner Finance branch and leave with a check on the same day.
Mariner also mailed hundreds of thousands of unsolicited “live checks” to consumers. Once consumers cashed these checks, Mariner aggressively pushed them to visit a Mariner branch to refinance and take out additional debt, which typically came packed with hidden add-on products. These tactics often ended up entrapping many consumers into a cycle of debt.
Mariner Finance is owned by a Wall Street private equity fund managed by Warburg Pincus LLC. When Warburg Pincus bought Mariner Finance, it had 57 branches in seven states. Today, just nine years later, Mariner Finance has more than 480 branches in 27 states and manages over $2 billion in loans.
The multistate lawsuit filed today asks the Court to order:
- Full restitution to all borrowers affected by Mariner’s unlawful practices
- Repayment by Mariner of any unlawfully gained profits
- Rescission or reformation of all contracts or loan agreements between Mariner and consumers affected by the company’s unlawful practices
- Mariner to stop charging consumers for add-on products and cease other harmful practices
- Civil penalties
Mariner Finance has nine branches in New Jersey. Consumers who believe Mariner deceived them should file a complaint with the New Jersey Division of Consumer Affairs here.
The Mariner Finance matter was handled by Deputy Attorneys General Yale Leber, Zeyad Assaf, Andrew Esoldi and Cathleen O’Donnell, as well as Section Chief/Deputy Attorney General Patricia Schiripo, all of the Consumer Fraud Prosecution section within the Division of Law’s Affirmative Civil Enforcement Practice Group. Division of Consumer Affairs Supervising Investigator Jennifer Micco and Investigator Renee Salikram also worked on the Mariner Financial case.