U.S. states sue Warburg-owned Mariner Finance, allege predatory lending

NEW YORK, Aug 16 (Reuters) – A lender owned by personal fairness agency Warburg Pincus LLC was sued on Tuesday by a number of U.S. states, and accused of charging cash-strapped debtors a whole bunch of tens of millions of {dollars} for “hidden” add-on merchandise that they by no means agreed to purchase.

Mariner Finance, with greater than 480 places of work in 27 states, was accused of partaking in “widespread credit score insurance coverage packing,” by promoting expensive insurance policies and different merchandise with out telling debtors and even after being instructed to not.

The plaintiffs – Pennsylvania, New Jersey, Oregon, Utah, Washington state and Washington, D.C. – additionally stated Mariner inspired staff to trick debtors into refinancing loans unnecessarily, to generate greater charges and promote extra add-ons.

“These sorts of predatory gross sales practices can lead customers right into a cycle of debt that is laborious to beat,” the workplace of Pennsylvania Legal professional Basic Josh Shapiro stated.

Many accusations resembled people who have bedeviled Wells Fargo & Co (WFC.N) lately, together with that staff hit required gross sales quotas, obtain bonuses for promoting extra merchandise, and face self-discipline in the event that they “fail to upsell.”

The states pinned some blame on Warburg, which purchased Mariner in 2013 and oversees greater than $85 billion of property, saying “Mariner’s illegal habits is motivated by the high-growth calls for of its proprietor.”

In an announcement, Mariner’s founder and Chief Govt Josh Johnson stated a “full and truthful consideration” of the proof ought to result in the lawsuit’s dismissal.

He additionally stated the Nottingham, Maryland-based firm had cooperated for almost 4 years with the states’ investigation, and can “proceed to defend itself as an vital supplier of credit score choices” to individuals with restricted entry to credit score.

Warburg, in a separate assertion, stated it supported Mariner’s objections, and has supported “moral enterprise conduct” all through its possession of that firm.

The New York-based agency’s president is Timothy Geithner, who as treasury secretary through the Obama administration criticized predatory lenders.

Geithner is talked about in Tuesday’s lawsuit however just isn’t a defendant.

The lawsuit seeks to unwind debtors’ improper funds, and acquire civil fines, full restitution and compensation of ill-gotten earnings.

The case is Pennsylvania et al v Mariner Finance LLC, U.S. District Courtroom, Jap District of Pennsylvania, No. 22-03253.

Reporting by Jonathan Stempel in New York; Modifying by Marguerita Choy

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