Merchandise obtained by customers from a leasing firm will be kept by those who leased it, and the firm will pay a $2 million penalty, after a federal agency found the firm tricked the customers and hid contract terms, the agency said Monday.
By allowing the customers to keep the merchandise, the Consumer Financial Protection Bureau (CFPB) said, the firm – Tempoe, LLC, with offices in Cincinnati and Manchester, N.H. – will lose $33.6 million in payments.
According to the CFPB, Tempoe offered financing at the point of sale to customers at major retailers such as Sears and Kmart. However, the agency contended, Tempoe hid the true nature of the agreements.
“Tempoe tricked consumers into signing the leases, and consumers found themselves unable to return products and on the hook for unexpectedly large payments,” the CFPB alleged in a release.
The agency said it is permanently banning Tempoe from offering consumer leases. The CFPB is also requiring the company to close each of its outstanding consumer accounts, and ordering the company to let customers keep leased merchandise with no further payment. The bureau calculated that represents approximately $33.6 million in “released payments.”
According to the CFPB, between 2015 and 2022, Tempoe entered into more than 1.8 million financial agreements with consumers. However, the, the agency said, its enforcement action covers conduct by Tempoe from Jan. 1, 2015, to now.
The bureau said Tempoe purchased personal property and services from retailers and then leased them to consumers. “Typically, consumers were offered Tempoe’s product after applying and being rejected for conventional financing when trying to make a purchase at a retailer,” the CFPB said. “Consumers made periodic payments for an initial term of five months, after which they had to decide whether to purchase the items with a large additional payment, or return the property and receive nothing in return.”
Leases offered by the firm, the agency said, were for items such as auto parts, large home appliances, furniture, toys, and jewelry. Tempoe would pay the retailer for the item, charge the consumer an initial payment at the point of sale, and then charge additional payments on a bi-weekly or monthly basis, the CFPB alleged.