WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Acima and its former CEO Aaron Allred. The agency accuses them of misleading consumers into high-cost credit agreements disguised as leases.
CFPB Director Rohit Chopra stated, “The CFPB is suing Acima and its founder for intentionally designing its credit product to trick customers and evade federal consumer financial protection laws.” Chopra emphasized that Acima used deceptive online tactics to obscure critical terms and conditions.
Acima Holdings, based in Utah, and its subsidiary Acima Digital, offer point-of-sale financing. In 2020, Rent-a-Center, now known as Upbound Group, Inc., acquired Acima Holdings for $1.65 billion. Acima, co-founded by Aaron Allred in 2013, operates in 46 states, primarily financing household goods.
Consumers apply for financing through Acima’s mobile app and are approved for a set amount. They then select products, which Acima nominally purchases from merchants and finances back to consumers over 12 months. However, the CFPB alleges that Acima’s products often cost consumers over 200% of the retail price due to hidden fees and confusing terms.
The lawsuit claims Acima violated multiple consumer protection laws, including:
- False Marketing: Acima marketed its product as credit but labeled it as a lease, misleading consumers about the nature of the agreement and the costs involved.
- Deceptive Digital Tactics: The application process obscured key terms through fine print and pop-ups, making it difficult for consumers to understand what they were agreeing to.
- Trapping Borrowers: Acima made it nearly impossible for consumers to return goods, despite promises that they could do so.
- Credit Reporting Failures: Acima reported inaccurate information, harming consumers’ credit. It also failed to investigate fraud allegations properly unless a police report was filed.
The CFPB seeks to stop the alleged unlawful conduct, provide restitution to affected consumers, and impose civil penalties. The case aims to protect consumers from deceptive financial practices.
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