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. 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 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’s business model trapped consumers into contracts that required them to pay far above market price for goods and services,” said CFPB Director Rohit Chopra. “Today’s order permanently bans Tempoe from offering such agreements.”
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.
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. 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.
Specifically, the CFPB found the company:
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The Act also provides the CFPB with the authority to enforce, as in this case, the Consumer Leasing Act and its implementing regulation, Regulation M.
The order announced today requires Tempoe to:
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