AGs: Maryland lender piled insurance plans on borrowers

The suit, filed by the attorneys general of the District of Columbia, New Jersey, Oregon, Pennsylvania, Utah and Washington, alleges that Mariner Finance pressured its sales to “add” additional insurance coverage for customers seeking personal and other loans.

PHILADELPHIA (AP) — A Maryland-based lender defrauded customers by selling them insurance policies they didn’t want or didn’t know about in many cases, state attorneys general said in a lawsuit filed Tuesday in federal court in Pennsylvania.

The suit, filed by the attorneys general of the District of Columbia, New Jersey, Oregon, Pennsylvania, Utah and Washington, alleges that Mariner Finance pressured its sales to “add” additional insurance coverage for customers seeking personal and other loans.

“Mariner presents itself as a community-oriented lender operating small local branches with strong ties to the local geography. “In reality, Mariner employs aggressive, high-pressure sales tactics dictated by a profit-driven model that operates under the famous maxim articulated in Glengarry Glen Ross: Always Be Closing,” the nearly 100-page lawsuit says.

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

Mariner disputed the claim in a statement from founder and CEO Josh Johnson, who said the company cooperated with the investigation and provided data, documents and testimony “that clearly demonstrate the legitimacy of its products and the vital support they provide to consumers.” .

“Mariner Finance continues to challenge the claims the small multi-state coalition has made and will continue to defend itself as an important provider of credit options for those who may have limited access to other sources of consumer credit,” Johnson said.

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

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

In 2019, Mariner sold nearly $122 million in premiums and fees for the so-called add-ons, net of interest, according to the lawsuit.

The average loan amount is $3,650 with an average interest rate of 28 percent, the lawsuit said. Added to insurance charged for $360 per loan, excluding interest.

“Because the premiums and fees are financed, these add-ons increase interest payments by an average of about $180 in loan interest, for a total added cost to the consumer of approximately $540,” the lawsuit says.

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

Most of the consumers who were interviewed by state officials as part of the lawsuit said they didn’t know the supplemental coverage was optional, that it cost more money, or that they had a supplement at all.

The loans, in many cases, were to financially distressed consumers who had urgent financial needs, according to Carrie Feis, who heads the New Jersey Division of Consumer Affairs.

“Mariner’s practice of tying expensive supplements to the loans of unwitting consumers has undoubtedly plunged many already debt-ridden families into more difficult circumstances,” Faiss said in a statement.

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