After motion to dismiss is tossed by judges, PA’s lawsuit against alleged deceptive PE group goes to trial

18 January 2024- Attorney General Michelle Henry announced significant progress in her multistate lawsuit against Mariner Finance, LLC (Mariner Finance) — a Wall Street private equity-owned lender that charged Pennsylvanians millions of dollars in hidden add-on products and interest.

Mariner Finance had filed a motion to dismiss, asking a federal court to dismiss all 15 federal and state law claims in the multistate lawsuit, in which Pennsylvania is joined by New Jersey, Washington, Oregon, and Washington D.C. The United States District Court for the Eastern District of Pennsylvania recently denied Mariner’s motion in its entirety.

The decision reaffirms the ability of state attorneys general to jointly bring Consumer Financial Protection Act (CFPA) claims in one court, conserving states’ resources and potentially expediting the litigation.

“This predatory lending company’s deceptive practices harmed borrowers. The company put its own profits ahead of the interests of customers who trusted Mariner to give them a loan without hidden junk fees,” Attorney General Henry said. “The federal court’s decision is major progress for consumers who were duped of millions of dollars by a company that then attempted to avoid facing the allegations at trial. We still have important work to do, but we are one step closer to getting justice.”

The lawsuit alleges that Mariner Finance charged consumers for hidden add-on products that consumers either didn’t know about or didn’t agree to buy. Consumers believed they entered into agreements to borrow and repay, over time, a certain amount of money. In reality, because of these hidden add-on products, Mariner added hundreds to thousands of dollars to the total amount a consumer owed.

Among other charges, the lawsuit also alleges that Mariner pushed borrowers who missed a payment to refinance their loan, adding hundreds or thousands of dollars to the total cost of repayment.

According to the lawsuit, Mariner charged Pennsylvanians $19.5 million for add-ons from 2015 to 2018 and an additional $8 million in interest.

Read the 35-page opinion. Here are a few key conclusions:

  • The Court rejected Mariner’s core argument, that venue was improper because the five plaintiff states chose to sue together in one court rather than in five separate courts.
  • The Court rejected Mariner’s argument that the plaintiff states had failed to comply with the CFPA’s provision that provides for states to notify the Consumer Financial Protection Bureau of a planned CFPA lawsuit.
  • The Court rejected Mariner’s argument that the states cannot enforce the CFPA’s prohibition on violating “a Federal consumer financial law,” which includes 18 “enumerated consumer laws.”
  • Finally, the Court also rejected Mariner’s argument that the CFPA’s grant of enforcement authority to the states violates the U.S. Constitution.

This decision is one of the only cases to date where a court has weighed in on these issues, and it is hoped this well-reasoned opinion will positively impact future efforts by state attorneys general and bank regulators to protect consumers with enforcement actions.

Borrowers who believe they have been subject to these, or other unfair or deceptive practices, are encouraged to file a complaint with the Office of Attorney General. They can also call 800-441-2555 or email scams@attorneygeneral.gov.