Author: Jonathan Stempel
Reuters: NEW YORK Several US states filed a lawsuit against a lender owned by Warburg Pincus LLC on Tuesday, alleging that the lender charged cash-strapped borrowers hundreds of millions of dollars for “hidden” add-on goods that they never consented to purchase.
Mariner Finance, a company with more than 480 locations across 27 states, was charged with “widespread credit insurance packing” for allegedly pushing pricey policies and other items on borrowers even after being told not to.
In order to increase fees and sell more add-ons, the plaintiffs, which include Pennsylvania, New Jersey, Oregon, Utah, Washington state, and Washington, D.C., claimed Mariner urged workers to deceive clients into refinancing loans unnecessarily.
According to Josh Shapiro, attorney general of Pennsylvania, “these kinds of fraudulent sales methods can drive customers into a cycle of debt that’s impossible to overcome.”
Many of the allegations mirrored those that have dogged Wells Fargo & Co in recent years, including the notion that staff members must meet set sales quotas in order to obtain bonuses, that they are punished for “failing to upsell,” and that they are subject to disciplinary action.
Warburg, which acquired Mariner in 2013 and is in charge of more than $85 billion in assets, was given some of the blame by the states, who claimed that Mariner’s “illegal activity is motivated by the high-growth aspirations of its owner.”
Josh Johnson, the founder and CEO of Mariner, said in a statement that the lawsuit should be dismissed after a “full and fair assessment” of the available evidence.
Additionally, he noted that the Nottingham, Maryland-based business had assisted the federal inquiry for almost four years and would “continue to defend itself as a vital source of credit options” for those with restricted access to credit.
A request for comment was forwarded to Mariner by Warburg.
Tim Geithner, the head of the New York-based company, denounced predatory lenders while serving as the treasury secretary under the Obama administration.
Geithner is mentioned in the lawsuit from Tuesday but isn’t named as a defendant.
The action aims to recover ill-gotten gains, civil fines, and full restitution for the borrowers’ unlawful payments.
Pennsylvania et al. v. Mariner Finance LLC, Eastern District of Pennsylvania, U.S. District Court, Case No. 22-03253
(Jonathan Stempel reported from New York; Marguerita Choy did the editing.)
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