OneMain Financial Facing Class Action Over Alleged Military Lending Act Violations

April 16, 2024 10:02 pm
Modern Recovery Management
Small Business Collections
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OneMain Financial Group has been hit with a proposed class action lawsuit that claims the lender has extended unlawful installment loans to thousands of active-duty military servicemembers.

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The 31-page lawsuit was filed by an active-duty serviceman residing in Virginia who alleges that each of the loans he was issued by OneMain Financial violated the Military Lending Act (MLA)—a federal law enacted to protect military service personnel and their dependents from unfair, “predatory” lending.

The Military Lending Act lawsuit relays that OneMain Financial in February 2020 issued the plaintiff a fifth installment loan, which was purported to have an annual percentage rate (APR) of 35.99 percent. However, the case contends that the lender failed to include all costs of credit, application processing fees and finance charges in the APR calculation.

Once these factors were added, the man’s actual APR was 37.372 percent—a rate which exceeds the 36 percent interest rate cap allowed under the MLA, the complaint claims. The filing alleges that each prior loan extended to the plaintiff similarly exceeded the lawful interest rate cap.

In addition, the lawsuit charges that the loans breached the MLA by failing to include certain mandatory disclosures and requiring the plaintiff to waive his right to a jury trial. Per the suit, the loans also prohibited the serviceman from participating in a class action lawsuit and required him to submit to a binding arbitration clause, in violation of federal law.

The case goes on to claim that when OneMain Financial refinanced one of the plaintiff’s loans, the lender unlawfully used the proceeds from the credit it extended to the man and required him to use his bank account as a security interest for the loan.

In light of the foregoing, the complaint contends that the plaintiff’s allegedly noncompliant loans have been rendered void.

The lawsuit looks to represent any borrowers covered by the MLA in the United States who entered into a loan agreement and disclosure statement in substantially the same form as the plaintiff’s and paid interest on the loan in the past five years.

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ShareLast Updated on April 11, 2024 — 4:04 PM

Kelsey McCroskey
Kelsey works primarily on’s newswire, reporting on cases as they happen.

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