WASHINGTON— The Consumer Financial Protection Bureau (CFPB) has taken action against Tempoe, LLC for “tricking consumers into expensive leasing agreements” by concealing the contract terms and costs, and failing to provide legally required disclosures.
Forty-one states and the District of Columbia are entering into a parallel multi-state settlement addressing the same conduct, according to the Bureau.
Tempoe offered financing at the point of sale to customers at major retailers such as Sears and Kmart.
“By hiding 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 said.
A Permanent Ban
The CFPB said it is permanently banning Tempoe from offering consumer leases, 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, representing approximately $33.6 million in released payments.
Tempoe is also paying a $2 million penalty, with $1 million deposited into CFPB's victims relief fund and $1 million paid to the states entered into the settlement.
Tempoe, LLC is an Ohio-based nonbank consumer finance company that offered lease purchase agreements to consumers nationwide. Between 2015 and 2022, Tempoe entered into over 1.8 million financial agreements with consumers. Today’s enforcement action covers conduct by Tempoe from January 1, 2015 to the present, according to the CFPB.
How It Worked
“Tempoe purchased personal property and services from retailers and then leased them to consumers,” the CFPB said. “Typically, consumers were offered Tempoe’s product after applying and being rejected for conventional financing when trying to make a purchase at a retailer. 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. Consumers were offered leases 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 Specifics
Specifically, the CFPB found the company:
- Concealed the terms of its lease agreements
- Trapped consumers with unreasonable return practices
- Failed to provide legally required disclosures
Enforcement Action
The order requires Tempoe to:
- Release consumers from existing lease agreements: This includes approximately 19,300 leases with an aggregate remaining balance of approximately $33.6 million.
- Permanently cease leasing activities.
- Tempoe is banned from engaging in any future leasing activities.
- Pay into the CFPB victims relief fund. Tempoe is also paying a $2 million penalty, with $1 million deposited into CFPB's victims relief fund and $1 million paid to the states entering into the settlement.
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