Mississippi has been named one of the 41 states included in a settlement with Tempoe, LLC following an investigation into the company’s advertising and leasing to consumers through retailers across the nation.
The multistate investigation revealed that Tempoe’s marketing and sales practices often misled consumers to believe they were signing up for an installment plan or credit sale when they were actually entering into a lease agreement.
According to the Consumer Financial Protection Bureau (CFPB), Tempoe was found guilty of the following:
- Concealed the terms of its lease agreements – Some consumers did not receive a copy of their lease agreement until after the transaction, while others never received a copy and instead relied on oral descriptions from employees inside the retailers. Tempoe encouraged employees to avoid calling the product a “lease.” Some consumers discovered only at the conclusion of their initial term that they did not own their items and were required to pay significantly more.
- Trapped consumers with unreasonable return practices – Consumers who wanted to cancel their lease agreement with Tempoe after the first 30 days, but within the initial five-month term, were required to return the product to Tempoe. However, Tempoe did not accept returns of many items, including property costing less than about $300. Consumers were therefore forced to exercise the “purchase option” on the lease, paying far higher than the original price.
- Failed to provide legally required disclosures – Most Tempoe lease agreements provide that unless consumers returned an item or exercised a purchase option after the initial five-month term, Tempoe would continue monthly auto-debiting the consumer for the full term of the contract, which was typically 18 or 36 months. In violation of the Consumer Leasing Act and its implementing regulation, Regulation M, Tempoe did not provide required disclosures to consumers who continued this month-to-month leasing for more than six months. Tempoe generated approximately $192 million in revenues from about 325,000 consumers from this unlawful conduct.
“Misleading consumers is not only wrong and harmful to the individuals directly involved, it is also a drag on the economy overall,” Attorney General Lynn Fitch said. “This settlement will prevent this kind of bad behavior by stopping Tempoe from this practice, providing a deterrent to others considering engaging in it, and helping to make whole those already impacted.”
Through the settlement, Tempoe is permanently banned from engaging in future consumer leasing activities.
The CFPB has since handed down a stipulated order that requires Tempoe to do the following:
- Release consumers from existing lease agreements – Tempoe must release all consumers with existing lease agreements from their leases, including from any payments owed and without regard to whether such leases are in default. Tempoe must also allow consumers to retain the leased products with no further financial obligation. 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. For consumers who did not receive required disclosures after the initial five-month term, and as funds permit, the CFPB will work to get them monetary relief from the CFPB’s victims relief fund.
Tempoe will not provide negative information regarding lessees to any consumer reporting agency.
Consumers with existing leases do not need to take any action as Tempoe will automatically cancel their account(s) as a result of this settlement.
Here are the other states that are participating in the settlement:
- Alaska
- Arizona
- Arkansas
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Georgia
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
