By Hank Russell
A personal financing company has been ordered to provide $2.4 million in debt relief to 835 New York State consumers and pay the state $175,000 in penalties for unlawfully charging them exorbitant fees on products and services and leasing them to the consumers, who they thought were buying them.
An investigation by the Office of the Attorney General (OAG) found that until 2017, Monterey Finance purchased and serviced payment plans for goods and services that were misleadingly presented to consumers to hide their exorbitant fees and other terms. Consumers who accepted these agreements believed they were purchasing a product or service. In reality, they were only leasing it, and were charged for monthly payments and fees that totaled well above the sticker price for the product or service.
Monterey partnered with businesses to service and collect on contracts that offered “financing” to consumers at the point of sale, according to AOG. While consumers believed they were receiving a traditional retail loan to purchase a product or service, these contracts were actually lease agreements.
Under these agreements, consumers were charged fees on top of monthly payments, including fees at the beginning and end of their lease terms. Many consumers were shocked to find out that they did not actually own the items they purchased, such as family pets and wedding dresses, and would not own them until they paid a final fee.
Monterey collected on these lease agreements, often charging consumers additional fees to pay their monthly lease payments. These illegal pay-to-pay fees further drove up costs. Consumers who fell behind on their monthly lease payments were threatened with repossession or transfer to Monterey’s nonexistent “legal department,” even for purchases like pets. In these cases, consumers — who were led to believe they owned their pets — were advised to deliver their pets to shelters when they could not make their monthly payments.
Consumers ended up paying well above the sticker price for purchases made with Monterey’s approved lease agreements. In many cases, consumers paid more than 200% above the sticker price by the end of the transaction. One consumer who signed a finance agreement to purchase a $2,000 puppy ended up paying $3,592.95 after all fees and monthly payments.
The OAG’s investigation found that Monterey violated New York laws by misleading consumers and servicing lease agreements for services, such as car repairs, that cannot be returned and have no residual value. While lease-to-own agreements should give consumers the right to return items they are leasing if they no longer wish to continue making payments for them, Monterey did not allow customers to return goods they purchased.
“Monterey preyed on consumers who needed financial assistance by charging illegal fees and deceiving them to make a profit,” said Attorney General Letitia James. “These misleading tactics cost New Yorkers millions of dollars. I am proud to have secured debt relief for those affected by Monterey’s deception and will always hold predatory lenders accountable.”
Long Island Life & Politics reached out to Monterey Financing’s Oceanside, California headquarters. The company did not respond at press time.