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Register pursuant to section 6(b) of the violations alleged in the Complaint. The interviews with competitors, obtained Act on January 22, 2016 (81 FR 3821). will move the Court for information from state regulators, and entry of the proposed Final Judgment deposed six Springleaf and OneMain Patricia A. Brink, after the public comment and this business executives. In addition, the Director of Civil Enforcement, Antitrust Response have been published in the Department consulted consumer Division. Federal Register pursuant to 15 U.S.C. advocacy groups to solicit their views [FR Doc. 2016–06242 Filed 3–18–16; 8:45 am] § 16(d). about the proposed acquisition. The BILLING CODE P Department carefully analyzed the I. Procedural History information it obtained from these On March 2, 2015, Springleaf sources and thoroughly considered all DEPARTMENT OF JUSTICE Holdings, Inc. (‘‘Springleaf’’) entered of the issues presented. into a purchase agreement to acquire Antitrust Division The Department found that the OneMain Financial Holdings, LLC proposed acquisition likely would have United States et al. v. Springleaf (‘‘OneMain’’) from CitiFinancial Credit eliminated substantial head-to-head Holdings, Inc., et al.; Public Comment Company for $4.25 billion. On competition between Springleaf and and Response on Proposed Final November 13, 2015, the United States OneMain in the provision of personal Judgment and the States of Colorado, Idaho, installment loans to subprime borrowers Texas, Washington and West Virginia in local areas within and around 126 Pursuant to the Antitrust Procedures and the Commonwealths of towns and municipalities in 11 states. In and Penalties Act, 15 U.S.C. 16(b)–(h), Pennsylvania and Virginia (collectively these areas, Springleaf and OneMain are the United States hereby publishes ‘‘Plaintiffs’’) filed a civil antitrust the largest providers of personal below the comment received on the Complaint seeking to enjoin Springleaf installment loans to subprime proposed Final Judgment in United from acquiring OneMain. Plaintiffs borrowers, and face little, if any, States et. al. v. Springleaf Holdings, Inc., alleged in the Complaint that the competition from other personal et. al., Civil Action No. 15–1992 (RMC), proposed acquisition likely would installment lenders. Without the benefit together with the Response of the substantially lessen competition for of competition between Springleaf and United States to Public Comment. personal installment loans to subprime OneMain, the Department concluded Copies of the comment and the borrowers in numerous local areas in that prices and other terms for personal United States’ Response are available for violation of Section 7 of the Clayton installment loans to subprime borrowers inspection on the Antitrust Division’s Act, 15 U.S.C. § 18. would become less favorable, and access Web site at http://www.justice.gov/atr, Simultaneously with the filing of the to such loans by subprime borrowers and at the Office of the Clerk of the Complaint, Plaintiffs filed a proposed would decrease. For these reasons, the United States District Court for the Final Judgment, an Asset Preservation Department, joined by the States, filed District of Columbia. Copies of these Stipulation and Order, and a a civil antitrust lawsuit to enjoin the materials may be obtained from the Competitive Impact Statement (‘‘CIS’’). merger and alleged that the proposed Antitrust Division upon request and As required by the Tunney Act, the transaction violated Section 7 of the payment of the copying fee set by United States published the proposed Clayton Act, 15 U.S.C. § 18. Department of Justice regulations. Final Judgment and CIS in the Federal The proposed Final Judgment Register on November 24, 2015, see 80 eliminates the anticompetitive effects Patricia A. Brink, FR 73212, and caused to be published identified in the Complaint by requiring Director of Civil Enforcement. summaries of the proposed Final Defendants to divest 127 Springleaf United States District Court for the Judgment and CIS, together with branches to Lendmark Financial District of Columbia directions for the submission of written Services or to one or more alternative comments relating to the proposed Final acquirers acceptable to the United United States of America, State of Judgment, in The Washington Post for States. The branches to be divested are Colorado, State of Idaho, Commonwealth of seven days from November 20 to located in the local areas within and Pennsylvania, State of Texas, November 26, 2015. The 60-day period around the 126 towns and Commonwealth of Virginia, State of for public comments ended on January Washington, and State of West Virginia, municipalities identified in the Plaintiffs, v. Springleaf Holdings, Inc., 25, 2016. The United States received Complaint. The divestitures will Onemain Financial Holdings, LLC, and one comment, which is described below establish Lendmark as a new, Citifinancial Credit Company, Defendants. and attached hereto as Exhibit 1. independent, and economically viable Case No.: 1:15-cv-01992 (RMC) II. The Investigation and the Proposed competitor in some states and local Response of Plaintiff United States to Settlement areas and allow Lendmark to enhance Public Comment on the Proposed Final its competitive presence in others. The proposed Final Judgment is the Since Plaintiffs submitted the Judgment culmination of more than six months of proposed Final Judgment on November Pursuant to the requirements of the investigation by the Antitrust Division 13, 2015, Lendmark has begun the Antitrust Procedures and Penalties Act, of the United States Department of process of obtaining state licenses for 15 U.S.C. § 16(b)–(h) (‘‘APPA’’ or Justice (‘‘Department’’), along with the acquisition of the 127 Springleaf ‘‘Tunney Act’’), the United States Offices of the State Attorneys General of branches. In addition, the Court hereby files the single public comment Colorado, Idaho, Texas, Washington, appointed Patricia A. Murphy as received concerning the proposed Final West Virginia, Pennsylvania, and Monitoring Trustee on January 19, 2016. Judgment in this case and the United Virginia (collectively ‘‘States’’). As part States’s response to the comment. After of the investigation, the Department III. Standard of Judicial Review careful consideration of the submitted issued 21 Civil Investigative Demands The Tunney Act requires that comment, the United States continues to for documents and information and proposed consent judgments in antitrust believe that the proposed Final collected more than 350,000 documents cases brought by the United States be Judgment provides an effective and from the Defendants and third parties. subject to a 60-day public comment appropriate remedy for the antitrust The Department also conducted period, after which the court shall

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determine whether entry of the Cir. 1981)). Instead, courts have held Tel. Co., 552 F. Supp. 131, 151 (D.D.C. proposed Final Judgment ‘‘is in the that: 1982) (citations and internal quotations public interest.’’ 15 U.S.C. § 16(e)(1). In [t]he balancing of competing social omitted); see also United States v. Alcan making that determination, the court, in and political interests affected by a Aluminum Ltd., 605 F. Supp. 619, 622 accordance with the statute as amended proposed antitrust consent decree must (W.D. Ky. 1985) (approving the consent in 2004, is required to consider: be left, in the first instance, to the decree even though the court would (A) the competitive impact of such discretion of the Attorney General. The have imposed a greater remedy). judgment, including termination of court’s role in protecting the public In its 2004 amendments to the alleged violations, provisions for interest is one of insuring that the Tunney Act,1 Congress made clear its enforcement and modification, duration government has not breached its duty to intent to preserve the practical benefits of relief sought, anticipated effects of the public in consenting to the decree. of using consent decrees in antitrust alternative remedies actually The court is required to determine not enforcement, adding the unambiguous considered, whether its terms are whether a particular decree is the one instruction that ‘‘[n]othing in this ambiguous, and any other competitive that will best serve society, but whether section shall be construed to require the considerations bearing upon the the settlement in ‘‘within the reaches of court to conduct an evidentiary hearing adequacy of such judgment that the the public interest.’’ More elaborate or to require the court to permit anyone court deems necessary to a requirements might undermine the to intervene.’’ 15 U.S.C. § 16(e)(2). The determination of whether the consent effectiveness of antitrust enforcement by procedure for the public interest judgment is in the public interest; and consent decree. determination is left to the discretion of (B) the impact of entry of such Bechtel, 648 F.2d at 666 (emphasis the court, with the recognition that the judgment upon competition in the added) (citations omitted). court’s ‘‘scope of review remains relevant market or markets, upon the sharply proscribed by precedent and the public generally and individuals In determining whether a proposed settlement is in the public interest, ‘‘the nature of the Tunney Act proceedings.’’ alleging specific injury from the SBC Commc’ns, 489 F. Supp. 2d at 11; violations set forth in the complaint court ‘must accord deference to the government’s predictions about the see also United States v. Enova Corp., including consideration of the public 107 F. Supp. 2d 10, 17 (D.D.C. 2000) benefit, if any, to be derived from a efficacy of its remedies.’ ’’ United States v. U.S. Airways Grp., Inc., 38 F. Supp. (‘‘[T]he Tunney Act expressly allows the determination of the issues at trial. court to make its public interest 15 U.S.C. § 16(e)(1). In considering these 3d 69, 76 (D.D.C. 2014) (quoting SBC determination on the basis of the statutory factors, the court’s inquiry is Commc’ns, 489 F. Supp. at 17). See also competitive impact statement and necessarily a limited one as the Microsoft, 56 F.3d at 1461 (noting that response to public comments alone.’’); government is entitled to ‘‘broad the government is entitled to deference US Airways, 38 F. Supp. 3d at 76 discretion to settle with the defendant as to its ‘‘predictions as to the effect of (same). within the reaches of the public the proposed remedies’’); United States interest.’’ United States v. Microsoft v. Archer-Daniels-Midland Co., 272 F. IV. Summary of Public Comment and Corp., 56 F.3d 1448, 1461 (D.C. Cir. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the United States’s Response 1995); see also United States v. SBC the court should grant due respect to the The United States received one public Commc’ns, Inc., 489 F. Supp. 2d 1, 10– United States’s ‘‘prediction as to the comment from the Center for 11 (D.D.C. 2007) (assessing public effect of the proposed remedies, its Responsible Lending (‘‘CRL’’), a interest standard under the Tunney perception of the market structure, and nonprofit, nonpartisan research and Act); United States v. InBev N.V./S.A., its views of the nature of the case’’); policy organization that seeks to No. 08-cv-1965 (JR), 2009 U.S. Dist. United States v. Morgan Stanley, 881 F. eliminate abusive financial practices. LEXIS 84787, at *3 (D.D.C. Aug. 11, Supp. 2d 563, 567–68 (S.D.N.Y. 2012) CRL submitted the comment to provide 2009) (discussing nature of review of (explaining that the government is additional context about the personal consent judgment under the Tunney entitled to deference in choice of Act; inquiry is limited to ‘‘whether the remedies). installment loan industry and highlight government’s determination that the Courts ‘‘may not require that the what CRL believes to be abusive proposed remedies will cure the remedies perfectly match the alleged industry practices that the proposed antitrust violations alleged in the violations.’’ SBC Commc’ns, 489 F. Final Judgment does not address. In complaint was reasonable, and whether Supp. 2d at 17. Rather, the ultimate particular, CRL describes three alleged the mechanisms to enforce the final question is whether ‘‘the remedies lending practices of particular concern: judgment are clear and manageable’’). [obtained in the decree are] so (1) the high incidence of repeat Under the APPA, a court considers, inconsonant with the allegations refinancing, which CRL claims is among other things, the relationship charged as to fall outside of the ‘reaches indicative of the industry’s widespread between the remedy secured and the of the public interest.’ ’’ Microsoft, 56 extension of loans that borrowers do not specific allegations set forth in the F.3d at 1461. Accordingly, the United have the ability to repay; (2) the sale of Complaint, whether the decree is States ‘‘need only provide a factual basis ancillary products such as credit sufficiently clear, whether the for concluding that the settlements are with installment loans, which enforcement mechanisms are sufficient, reasonably adequate remedies for the CRL alleges significantly increases and whether the decree may positively alleged harms.’’ SBC Commc’ns, 489 F. borrowing costs and lender fees; and (3) harm third parties. See Microsoft, 56 Supp. 2d at 17; see also United States the tendency of personal installment F.3d at 1458–62. With respect to the v. Apple, Inc. 889 F. Supp. 2d 623, 631 1 The 2004 amendments substituted ‘‘shall’’ for adequacy of the relief secured by the (S.D.N.Y. 2012). And, a ‘‘proposed ‘‘may’’ in directing relevant factors for courts to decree, a court may not ‘‘engage in an decree must be approved even if it falls consider and amended the list of factors to focus on unrestricted evaluation of what relief short of the remedy the court would competitive considerations and to address would best serve the public.’’ United impose on its own, as long as it falls potentially ambiguous judgment terms. Compare 15 U.S.C. § 16(e) (2004), with 15 U.S.C. § 16(e)(1) States v. BNS, Inc., 858 F.2d 456, 462 within the range of acceptability or is (2006); see also SBC Commc’ns, 489 F. Supp. 2d at (9th Cir. 1988) (citing United States v. within the reaches of the public 11 (concluding that the 2004 amendments ‘‘effected Bechtel Corp., 648 F.2d 660, 666 (9th interest.’’ United States v. Am. Tel. & minimal changes’’ to Tunney Act review).

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lenders to charge the maximum interest V. Conclusion of installment loans as a ‘‘lifeline’’ for rate permitted under state law, which After reviewing the public comment, consumers. Loans that are not CRL claims to occur regardless of the the United States continues to believe appropriately underwritten such that a borrower’s creditworthiness. Taken that the proposed Final Judgment, as borrower can repay them without together, CRL suggests that these alleged drafted, provides an effective and refinancing are not a lifeline. Neither are practices demonstrate that personal appropriate remedy for the antitrust loans laden with credit insurance installment loans offer little benefit to violations alleged in the Complaint, and products that significantly increase the consumers and often lead to more is therefore in the public interest. The cost of the loan while providing little to financial harm than help. United States will move this Court to no benefit to the borrower a lifeline. enter the proposed Final Judgment after Rather, installment loans like those that The Department appreciates CRL’s OneMain and Springleaf make often advocacy efforts on behalf of consumers the comment and this response are published in the Federal Register. sink borrowers into inescapable debt. and takes CRL’s concerns about possible Repeat refinancings provide lenders abusive industry practices seriously. Dated: March 08, 2016 the opportunity to extend the length of However, the Department is tasked with Respectfully submitted, the loan and charge new origination or enforcing the antitrust laws of the llll/s/llll processing fees, but often fail to generate United States and does not have Angela Ting (D.C. Bar #449576), benefits for the borrower. Worse, jurisdiction to address other issues of United States Department of Justice, refinancing allows the lender to sell consumer protection that fall within the Antitrust Division, Litigation II Section, 450 new add-on credit insurance products. purview of agencies such as the Fifth Street, NW., Suite 8700, Washington, This creates a harmful, symbiotic DC 20530, Tel.: (202) 616–7721, Email: Consumer Financial Protection Bureau. [email protected]. relationship between refinancing and The Department’s antitrust investigation add-on products—refinancing is not was limited to analysis of Springleaf’s Comments From the Center for only a powerful and lucrative incentive proposed acquisition of OneMain and Responsible Lending to the U.S. for installment lenders to extend the its likely competitive effects. In reaching Department of Justice Regarding United loan, but the ability to sell new the proposed settlement, the States et al. v. Springleaf Holdings, Inc., insurance products with each loan that Department concluded that there was et al.; Proposed Final Judgment and provide substantial compensation to the direct and meaningful competition Competitive Impact Statement lender results in added cost to the between Springleaf and OneMain January 23, 2016 borrowers with little or no benefit. (competition that was not limited to The Center for Responsible Lending 1 Repeat Refinancing Indicates branding and branch location, as submits this comment to provide Unaffordable Loans or Lending Without suggested in CRL’s comment); that additional context about the consumer Regard to Ability to Repay subprime borrowers benefitted from this installment loan market, in particular to Regardless of the type of loan product, head-to-head competition; and that the highlight issues unaddressed by the evidence of significant repeat loss of this competition would likely proposed settlement with One Main and refinancing is a signal of troublesome result in higher prices and less favorable Springleaf. In this letter, the practices. Typically, the original loan terms for personal installment loans in undersigned organizations bring to your was not made on terms affordable to the over 120 local areas in 11 states. The attention three areas of concern that the borrower and/or the lender is engaged divestitures set forth in the proposed settlement did not address, but which in loan flipping to increase the costs of Final Judgment seek to eliminate these have a significant impact on borrowers: the credit and extend the indebtedness. anticompetitive effects in all of the local • The high incidence of repeat In fact, longstanding applications of the areas of concern. refinancing in the industry; principle of ‘‘ability to repay’’ provide • CRL’s comment suggests that the The sale of ancillary products such that it means determining the borrower Department should—as part of its as credit insurance that significantly can afford to repay a loan without review of the proposed merger— increase the cost of installment loans refinancing, renewing, or reborrowing.2 investigate and take steps to remedy while providing very little benefit to Installment loans have been associated alleged industry practices that are borrowers; and with repeated refinances that account • outside of the Department’s merger The tendency of lenders to charge for as much two-thirds of loan business. review and thus are not (and cannot be) the maximum interest rate permitted Upon refinancing, the lender assesses challenged in the Complaint. It is well- under state law regardless of the new fees and add-on products where settled that comments, such as CRL’s creditworthiness of the borrower. allowed while extending the term of the comment, that are unrelated to the We were also particularly concerned loan. Consumers are typically not given about the Department’s characterization concerns identified in the complaint an adequate rebate of charges prepaid reach beyond the scope of this Court’s on the first loan. 1 The Center for Responsible Lending (CRL), a These loans are often secured by a Tunney Act review. See, e.g., SBC nonprofit, nonpartisan research and policy Commc’ns, 489 F. Supp. 2d at 14 organization dedicated to protecting borrower’s personal property, car or (holding that ‘‘a district court is not homeownership and family wealth by working to both. This practice provides the lender permitted to ‘reach beyond the eliminate abusive financial practices. CRL is an extraordinary leverage over the affiliate of Self-Help, a nonprofit community borrower as well as the opportunity to complaint to evaluate claims that the development financial institution. For thirty years, government did not make and to inquire Self-Help has focused on creating asset-building require and sell expensive property as to why they were not made’ ’’) opportunities for low-income, rural, women- headed, and minority families, primarily through 2 See, e.g., the Federal Reserve Board’s 2009 rules (quoting Microsoft, 56 F.3d at 1459) financing safe, affordable home loans and small under the Home Ownership and Equity Protection (emphasis in original); see also US business loans. In total, Self-Help has provided $6 Act (HOEPA), which note that ‘‘[l]ending without Airways, 38 F. Supp. 3d at 76. billion in financing to 70,000 homebuyers, small regard to repayment ability . . . facilitates an Accordingly, CRL’s comment does not businesses and nonprofit organizations and serves abusive strategy of ‘flipping’ borrowers in a more than 80,000 mostly low-income families succession of refinancings.’’ Federal Reserve provide a basis for rejecting the through 30 retail credit union branches in North System, Truth in Lending, Regulation Z; Final Rule, proposed Final Judgment. Carolina, California, and Chicago. 73 FR 44522, 44542 (July 30, 2008).

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insurance. In the case of loans secured These trends of repeat refinancing borrowers and the significant lack of by personal property, it is extremely extend beyond these individual national value these products provide.12 For unlikely that upon default the lender companies, but rather appear to example, one installment loan described will repossess used personal property of permeate the consumer installment in the investigative series was made to little value, but the threat of industry as a whole. In North Carolina, a Service member with an APR of 90% repossession is an effective collection for example, where the state regulator but actually had an effective 182% tactic.3 It is for this reason that the FTC collects annual data on installment MAPR when the ancillary products banned the practice of securing loans lending, in 2014, 80 percent of loans were included. In another example, ‘‘A with household goods, but the decades- made by all consumer finance $2,475 installment loan made [by TMX old rule has not been updated to include companies in the state were re- Finance] to a soldier at Fort Stewart items such as computers and financings of outstanding loans or the near Savannah, Ga., in 2011 . . . carried smartphones. Even in the case of auto origination of new loans to previous a 43 percent annual rate over 14 title loans, where lenders do repossess customers.9 months—but that rate effectively soared the vehicles, the primary purpose of to 80 percent when the insurance Ancillary Products Significantly holding the title is to coerce repayment products were included. To get the loan, Increase the Cost of Loans Above Their of an unaffordable loan. the soldier surrendered the title to his Stated Interest Rate, While Providing A front-page New York Times article car.’’ The investigation further describes Notoriously Little Benefit to Borrowers noted that, although OneMain Financial how some employees of lenders ‘‘offers its borrowers unsecured, Add-on products are of particular deliberately conceal or misrepresent the installment loans with interest rates of concern in installment loans, yet the add-on products from the borrower.13 up to 36 percent,’’ many of its borrowers settlement is silent as to this additional This same investigative series also refinance the loan.4 (Note: Importantly, cost. Installment loans frequently showed how installment lenders sell this interest rate excludes the typically include high-cost ancillary products like loss of income insurance to individuals significant cost of ancillary products, credit life and disability insurance and/ receiving government benefits, such as discussed further below.) According to or discount clubs or plans that increase social security or government the New York Times: ‘‘About 60 percent the cost of credit significantly. pensions.14 of OneMain’s loans are so-called Refinancing exacerbates the harms Borrowers are also likely to have a renewals’’ that may essentially be caused by add-on products, giving poor understanding of potential ‘‘ ‘default masking’ because borrowers additional opportunities for lenders to exclusions for the insurance purchased may be able to refinance before they run pack additional fees into each loan. or may be misled to believe that the into trouble paying back their current As a signal of the harms of these insurance policy covers more than it balance.’’ 5 ancillary products, in 2006, when does. For example, one man who In addition, in documents related to Congress enacted the Military Lending purchased credit disability insurance the securitization of the loans, OneMain Act’s cap of a 36% Military APR lost two fingers in a work-related notes, ‘‘In certain cases, a Renewal may (MAPR) on consumer credit extended to accident but was denied coverage be offered to customers whose personal active duty families, it specifically because the policy only paid if the loans are in the early stages of included, within the calculation of the borrower lost at least four fingers or the delinquency.’’ 6 cap, charges for credit insurance and whole hand.15 Likewise, Springleaf also emphasizes other ancillary products sold in These add-ons accrue notoriously the importance of loan renewals to its connection with credit transactions. In little benefit to borrowers. A key business plan, expecting ‘‘a substantial 2014, the U.S. Department of Defense measure of the efficacy of insurance portion of the Loans will be renewed noted, ‘‘[O]ther costs to the consumer programs is the loss ratio—the ....’’7 It further notes: ‘‘[E]ffecting not included in the APR could make percentage of premiums that are paid renewals of personal loans for current loans below 36% above that threshold out in claims. We do not know the loss personal loan borrowers who have when considered as part of that ratios of the Springleaf or One Main demonstrated their ability and calculation. These additional costs, credit insurance products, but available willingness to repay amounts owed to along with repeated refinancing have evidence about other products indicates Springleaf into new and larger personal come under scrutiny.’’ 10 As a result of that credit insurance often has little loans is an important part of these concerns, in 2015, the U.S. value for the consumer. For one Springleaf’s branch lending business.’’ 8 Department of Defense updated its rules insurance company whose products are implementing the MLA not only to sold by consumer finance companies, 69 3 Indeed, given this extraordinary, coercive extend the 36% MAPR to installment percent of the premiums went to back leverage, repayment of a loan secured by personal loans but also to ensure that the MAPR property is far from indication that a borrower had a genuine ability to afford the loan while meeting is always inclusive of credit insurance 12 The ProPublica series on installment lending ongoing expenses; it means only that the lender was and other ancillary products.11 from May 2013 is at: http://www.marketplace.org/ able to extract payment. (footnoting b/c thinking it A recent investigative series into the topics/wealth-poverty/beyond-payday-loans/ seems good to include but don’t want to interrupt sale of credit insurance highlighted both victory-drive-soldiers-defeated-debt-story- the refinance flow). propublica. 4 Michael Corkery, ‘‘States Ease Interest Rate the significant increased cost to 13 Id., (‘‘You were supposed to tell the customer Laws That Protected Poor Borrowers,’’ New York you could not do the loan without them purchasing Times, Oct. 21, 2014. 9 http://www.nccob.org/Public/docs/Financial all of the insurance products, and you never said 5 Id. %20Institutions/Consumer%20Finance/2014_ ‘purchase,’ . . . You said they are ‘included with 6 OneMain Financial, OMFIT 2015–3 Private Annual_Report.pdf the loan’ and focused on how wonderful they are Placement Memorandum, at 91, http://files. 10 U.S. Department of Defense, ‘‘Report: . . . Every new person who came in, we always hit shareholder.com/downloads/AMDA-28PMI5/ Enhancement of Protections on Consumer Credit for and maximized with the insurance . . . That was 1321842233x0x867148/8308BAA5-B813-4111- Members of the Armed Forces and Their money that went back to the company.’’). 84BC-31DCD0DD0918/OMFIT_2015–3_--_Final_ Dependents’’ (April 2014). 14 Complaint, Illinois v. CMK Investments, Inc., PPM.pdf. 11 U.S. Department of Defense, ‘‘Limitations on 15 Paul Kiel, The 182 Percent Loan: How 7 Springleaf , 2013–A Private Terms of Consumer Credit Extended to Service Installment Lenders Put Borrowers in a World of Placement Memorandum, http://investor.springleaf Members and Dependents,’’ Final Rule, July 2015, Hurt, ProPublica, May 13, 2013, available at http:// financial.com/asset-backed-securities.cfm. https://www.gpo.gov/fdsys/pkg/FR-2015-07-22/pdf/ www.propublica.org/article/installment-loans- 8 Id. 2015-17480.pdf. world-finance.

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to the lenders, while 5 percent went to Both companies sell the products Lenders Tend To Charge the Maximum pay actual insurance claims. A similar through affiliates; for both companies, Rate Permitted Under State Law pattern holds for the sale of its accident these affiliates are significant parts of In its 2012 annual report to investors, and health policies sold in junction their business. For example, Springleaf a national consumer installment lender with the loan—in one state, Georgia, in notes that financed insurance premiums noted ‘‘that virtually all participants in 2011, 56 percent went back to the account for 4% of the aggregate the small-loan consumer finance lenders, and only 14 percent went to principal loan balance, and for industry charge at or close to the 16 claims. OneMain, they represented 5.3% of the maximum rates permitted under A series of enforcement actions by the aggregate principal balance of OneMain applicable state laws in those states Consumer Financial Protection Bureau Financial’s personal loan portfolio as of with interest rate limitations.’’ 22 provides important examples of how December 31, 2013. Similarly, in an in-depth examination of add-on products can be used to increase In North Carolina, where Springleaf the consumer installment lending the cost of using a , both at and OneMain comprise the two largest industry, the NC Commission on the time the account is opened and later lenders, the sale of insurance products 17 determined that ‘‘licensees were in the relationship. In July 2012, the on installment loans made by consumer charging the maximum blended rate CFPB issued a bulletin describing its finance companies is more than double allowable.’’ 23 There is no competition supervisory experience with add-on the number of loans originated, on price in this market—rather, any products and clarifying the steps that indicating that a single loan is often competition is centered around store supervised institutions should take to stacked with multiple insurance location and branding. For consumers, ensure that add-on products do not products.20 the presence of more or different lenders harm consumers or violate federal Further indicative that some lenders in a community will have no law.18 The bulletin discussed use credit insurance or other add-on meaningful impact on the cost of expectations around the marketing of sales to drive up loan costs is the fact that installment lenders tack on add-on installment loans. add-on products and associated We urge the Department to consider products in states that have lower employee compensation guidelines to this information carefully, and to clarify statutory caps on interest, but do not do ensure that financial institutions do not its statement that these loans are helpful create an incentive to provide so in states that allow for higher interest to communities in need. As this inaccurate information. The bulletin rates.21 information shows, too often these loans also highlighted the need to ensure that A survey by the North Carolina Justice lead to financial harm, not help. consumers are not required to purchase Center puts a point on how add-ons products as a condition of obtaining help drive refinancings. The survey of [FR Doc. 2016–06238 Filed 3–18–16; 8:45 am] credit. 50 cases filed by consumer finance BILLING CODE P As noted in reports to investors, both lenders in Wake County, North Springleaf and OneMain sell various Carolina, found that where there was ancillary products, such as credit evidence of refinancing, a majority of DEPARTMENT OF JUSTICE insurance and membership products, the ‘‘payout’’ went towards paying [OMB Number 1103–0100] which are typically financed into the credit insurance fees. The average principal of the loan upon origination.19 amount disbursed to borrowers was less Agency Information Collection than $1.50. Activities: Proposed eCollection 16 Id. eComments Requested Monitoring 17 See summary of CFPB enforcement actions in shareholder.com/downloads/AMDA-28PMI5/13218 Information Collections Comments of Center for Responsible Lending, 42233x0x867148/8308BAA5-B813-4111-84BC- National Consumer Law Center, Consumer 31DCD0DD0918/OMFIT_2015-3_-_Final_PPM.pdf AGENCY: Community Orient Policing Federation of America, Consumer Action, and U.S. ‘‘OneMain Financial offers its customers optional Services, Department of Justice. PIRG, to U.S Department of Defense, December 31, credit insurance products and membership 2014, http://www.responsiblelending.org/sites/ programs, and the premiums and fees for these ACTION: 30-Day notice. default/files/nodes/files/research-publication/mla_ products and programs typically are financed as comments_12242014.pdf. part of the principal balance of the applicable SUMMARY: The Department of Justice 18 Marketing of Credit Card Add-on Products. personal loan. See ‘‘Underwriting Process and (DOJ) Office of Community Oriented CFPB Bulletin 2012–06. Washington, DC: Consumer Standards—Optional Products: Credit Insurance Policing Services (COPS) will be Financial Protection Bureau, July 18, 2012. http:// and Membership Program’’ in this private files.consumerfinance.gov/f/201207_cfpb_bulletin_ placement memorandum. This represents submitting the following information marketing_of_credit_card_addon_products.pdf. approximately 4.9% of the aggregate principal collection request to the Office of 19 Springleaf Financial Services, 2015–B Private balance of OneMain Financial’s personal loan Management and Budget (OMB) for Placement Memorandum, http:// portfolio as of June 30, 2015. . . . OneMain review and approval in accordance with investor.springleaffinancial.com/asset-backed- Financial offers optional insurance products to its securities.cfm ‘‘Springleaf, Springleaf sells credit customers through its affiliated insurance the Paperwork Reduction Act of 1995. insurance products to its personal loan borrowers. companies American Health and Life Insurance, Co. The proposed information collection These products are provided by a group of (‘‘AHL’’), and Triton Insurance Company (‘‘Triton’’ was previously published in the Federal Springleaf-affiliated insurance companies and and together with AHL, ‘‘Citi Assurance Services’’ Register at 81 FR 1443, on January 12, insure the personal loan borrower’s payment or ‘‘CAS’’), as described below under ‘‘Underwriting obligations on the related personal loan in the event Process and Standards—Optional Products: Credit 2016, to obtain comments from the of such personal loan borrower’s inability to make Insurance and Membership Program’’ in this public and affected agencies. monthly payments due to death, disability or private placement memorandum. AHL and Triton DATES: The purpose of this notice is to involuntary unemployment. Payment of the are wholly-owned subsidiaries of CCC. associated premiums can be made by the Borrower 20 The North Carolina Commissioner of Banks’s allow for an additional 30 days until separately, but except in very rare instances, the 2014 Consumer Finance Annual Report showed April 20, 2016. personal loan borrower finances payment of the more than 1.2 million credit insurance products FOR FURTHER INFORMATION CONTACT: If premium and it is included in the principal balance were sold on only 495,682 loans. http://www.nccob. you have comments especially on the of the applicable personal loan. The financing of org/Public/docs/Financial%20Institutions/ credit insurance products premiums generally Consumer%20Finance/2014_Annual_Report.pdf represents approximately 4.00% of the aggregate 21 Kiel, Paul, ‘‘The 182 Percent Loan: How 22 World Acceptance Corporation, SEC Filing 10– principal balance of Springleaf’s personal loan Installment Lenders Put Borrowers in a World of K, March 31, 2012. portfolio.’’ Hurt,’’ ProPublica, May 13, 2014. http://www. 23 N.C. Commissioner of Banks, ‘‘The Consumer OneMain Financial, OMFIT 2015–3 Private propublica.org/article/installment-loans-world- Finance Act: Report and Recommendations to the Placement Memorandum, at 91, http://files. finance. 2011 General Assembly.’’ February 2011.

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