• Attorney General James and the coalition are seeking court orders to stop OneMain’s “misleading and abusive practices” and to collect restitution for consumers who were “cheated.”
• NY AG alleges that OneMain’s customers are charged hundreds or thousands of dollars more for their loans than they expect. 
• BofA analyst Mihir Bhatia earlier in the month lowered the firm's price target on OneMain to $66 from $74. 

OneMain stock fell nearly 8% on Monday after New York Attorney General Letitia James led a bipartisan coalition of 12 other attorneys general in suing the company.

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According to a statement, Attorney General James and the coalition allege that OneMain exploits its vulnerable customers by loading their already high-cost loans with expensive and often “useless” additional products like insurance policies.

Details

OneMain adds these products to consumers’ loans without their knowledge or by misleading them about the products’ terms and costs, the coalition said. As a result, customers are charged hundreds or thousands of dollars more for their loans than they expect. Attorney General James and the coalition are seeking court orders to stop OneMain’s “misleading and abusive practices” and to collect restitution for consumers who were “cheated”.

In a vicious cycle, consumers are often forced to refinance into more expensive loan packages in order to keep up with payments to OneMain, at which point OneMain misleads them again and packs more products into their loans, the statement said. 

“OneMain targets people who are already struggling financially, saddling them with hidden fees and misleading loans to trap them in even more debt,” said Attorney General James. “These predatory tactics are driving up costs for working families across New York and the country. Today I am taking action to stop OneMain’s illegal and abusive business model and get New Yorkers their money back.”

Other Analyst Takes

BofA analyst Mihir Bhatia earlier in the month lowered the firm's price target on OneMain to $66 from $74 and kept a ‘Buy’ rating on the shares. The firm said it is adjusting price targets for several consumer finance stocks to reflect a more uncertain macro outlook and lower market multiples.

Retail Reaction

Retail sentiment around OMF stock trended in ‘bearish’ territory amid ‘normal’ territory. 

Shares in the company have fallen 28% over the past year.