![]() ![]() Z, and that Snap failed to provide legally required disclosures. Z, specifically asserting that Snap is a creditor whose lease-purchase agreements qualify as "credit" and "credit sales" under TILA/Reg. The CFPB alleges that Snap violated TILA and Reg. Additionally, the CFPB complains that certain merchandise (e.g., mattresses, auto-related) would not be accepted for return at all. In addition, Snap's internal trainings allegedly contradicted the terms pertaining to returns and surrenders, including by discouraging returns and surrenders of merchandise. The CFPB asserts that Snap refused to allow termination of the agreements "until made all payments due and past due through the end of their recurring 60-day term." Consumers also were "required to contact" Snap to learn how to terminate their agreement. The CFPB further alleges that Snap's transactions are "credit" and that, in turn, Snap had improperly conditioned the extension of credit on consumers' repayment by preauthorized electronic funds transfers. Automatic ACH Payment Terms and EFTA Violations. Consumers were required to pay a processing fee before receiving a complete summary of the terms of their agreements and before seeing or signing the final agreement. Snap relied on its partner merchants to explain those agreements without providing the merchants any written guidance for doing so. Merchants would frequently sign and submit agreements on behalf of consumers without the consumer's prior review of the agreement. In most cases, the application and contracting process was completed entirely on the merchant's computer or tablet. The CFPB alleges that Snap's merchant-based application and contracting process materially interfered with consumers' ability to understand the terms and conditions of their lease-purchase transactions, noting the following: Consumers who miss the 100-day deadline pay significantly more than the "cash" price of their merchandise/service. Consumers must affirmatively schedule a new payment amount or make a balloon payment before their 100-day deadline, even though they reasonably believe their automatically scheduled payments would fulfill their payment obligations by the close of the 100-day period. Snap's 100-day early payout option totals more than the "cash" price of the merchandise or service. ![]() Snap allegedly used the misleading phrase "100 Day Cash Payoff" in advertisements for its transactions and omitted any further explanation of the terms. The CFPB alleges that Snap engaged in unfair, misleading, and/or unlawful business practices stemming from its advertising, contracting, and servicing (including collection) of rent-to-own agreements, which the CFPB refers to as "Purchase Agreements." The areas of focus are:Īdvertising to Consumers. In the lawsuit, the CFPB takes aim at Snap's lease-purchase transactions and even asserts that the transactions constitute "credit" under the CFPA, thereby bringing into play numerous credit-related regulations. Holdings LLC, Snap Finance Holdings LLC) (referred to herein as "Snap") in the US District Court, District of Utah, for alleged violations of the Consumer Financial Protection Act (CFPA), the Electronic Fund Transfer Act (EFTA), the Truth in Lending Act (TILA), and the Fair Credit Reporting Act (FCRA), as well as applicable implementing regulations, relating to personal property lease-purchase (aka "rent-to-own") transactions. On July 19, the Consumer Financial Protection Bureau (CFPB) filed a complaint against Snap Finance LLC and its affiliates (Snap RTO LLC, Snap Second Look LLC, Snap U.S. ![]() To embed, copy and paste the code into your website or blog: The Bureau Sues Snap Finance and Asserts That Snap's Transactions are "Credit" Under Federal Law Is the CFPB Seeking to Expand the Definition of Credit and Its Regulatory Reach? The Bureau Sues Snap Finance and Asserts That S. ![]()
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