Utah and 16 other states have joined the $665 million multistate settlement with Snap Finance.
The settlement cancels $16,758,262 in lease payments owed by Utah consumers. Utahns who signed Snap lease-to-own agreements from 2017 through 2022 will keep their merchandise and owe no further payments.
Snap Finance is a consumer financial services company that offers lease-to-own agreements through retailers rather than its own stores. When a customer chooses Snap at checkout, Snap buys the merchandise from the retailer, keeps ownership of it, and leases it to the customer until the lease is paid off.
The states allege that Snap used misleading disclosures about its leases, did not let customers see the full terms of their contracts, and used confusing payment terms. The states also allege customers had trouble reaching Snap when they tried to return products.
The states allege some customers believed they were signing up to pay off their purchases in 100 days or fewer, but instead entered into longer contracts that cost more. The states also allege Snap told customers that making on-time lease payments could raise their credit scores — a claim the states say was untrue. The investigation also examined Snap’s debt-collection practices and its processes for returning products and ending leases.
“Utahns shouldn’t get trapped in confusing leases when they buy everyday items,” said Attorney General Derek Brown in a released statement. “This settlement clears what Utahns still owed and lets them keep what they leased. We appreciate Snap’s willingness to work with us to resolve our concerns and its commitment to doing business differently going forward.”
“We expect businesses operating in Utah to be honest with their customers. Misrepresenting the true nature of a transaction, or even hiding those terms altogether, harms Utahns, their trust in the marketplace, and the state’s economy,” said Utah Division of Consumer Protection Director Daniel Larsen in a release. “We’re pleased to see some of these wrongs made right, and appreciate the efforts of our partners in securing this strong result for Utah.”
Snap cooperated with the investigation and agreed to change its business practices. Under the settlement, Snap must:
Use accurate advertising. Snap will not use slogans such as “cash payoff,” “same as cash” and “no additional fees required,” which the states say hid the true cost of a lease.
Show the full terms. Customers must see the full terms and cost of a lease, as state law requires, before they sign.
Repair and replace property. Snap must repair or replace leased property in the situations the settlement lists. Snap also may not threaten to take back a product for nonpayment when it does not intend to.
Make no credit score claims. Snap may not say that applying for a lease or using its lease-to-own product will raise a customer’s credit score.
Protect the right to end a lease. Snap must clearly tell customers they have the right to end a lease and may not interfere with that right. Snap must also give customers practical ways to return property and must stop charging payments while a request to end a lease is processed.
Train retailers and report on compliance. Snap must meet initial and ongoing training requirements for its retail partners and file annual compliance reports for three years.
Iowa and Nebraska led the settlement, which cancels $662.1 million in lease payments across 17 states. In addition, Snap will also pay $2.75 million to the participating states, including $150,000 to Utah. The other participating states are Arkansas, Florida, Georgia, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Dakota, Oklahoma, Texas, West Virginia and Wyoming.
