On July 26, 2024, the CFPB sued Acima and its former chief executive officer Aaron Allred for illegal lending activities in connection with as many as five million consumer financing agreements. The CFPB alleges Acima used deceptive dark patterns and other tricks to trap consumers in high-cost credit agreements to finance the purchase of household goods.
From CFPB Director Rohit Chopra’s statement:
“The CFPB is suing Acima and its founder for intentionally designing its credit product to trick customers and evade federal consumer financial protection laws. The defendants used deceptive digital dark patterns and other online tricks to obscure key terms and conditions.”
Acima Holdings and its subsidiary, Acima Digital, are two point-of-sale financing companies based in Utah. In 2020, Rent-a-Center acquired Acima Holdings and is now known as Upbound Group, Inc. Acima offers a financing product, primarily for durable household goods, which it purports to be a lease or “virtual rent-to-own” product, in 46 states. Acima's financing allows consumers to apply for money, often via a mobile app. Once approved, they can choose home goods then Acima buys these items from merchants and finances them for the consumers, usually over 12 months.
The CFPB alleges that Acima violated the Consumer Financial Protection Act, Truth in Lending Act, Fair Credit Reporting Act, and Electronic Fund Transfer Act by misleading and harming consumers through:
False marketing. Acima sometimes marketed its product as credit for buying household goods, but many borrowers later discovered it was actually a “lease.” The company also misled consumers about its 90-day “early purchase option,” making it seem like an interest-free loan. In truth, this option ended up costing consumers more than the items they bought.
Deceptive digital dark patterns. Acima created a confusing application process to mislead borrowers. First, borrowers applied for Acima's financing. Once approved, they chose items to buy. However, only at checkout did Acima present a lease agreement, which they called a lease. In their mobile app, Acima made this agreement hard to see by using small print and pop-ups that covered it up.
Trapping borrowers. Borrowers who believed they could avoid the high costs of an Acima agreement by returning products discovered that Acima created a returns process that made it extremely difficult. Ultimately, fewer than 1% of Acima customers returned their items.
Widespread credit reporting failures. Acima provided incorrect information about its borrowers, possibly harming their credit and chances for future loans. Acima also did not notify consumers properly when it reported negative information. Additionally, when a consumer claimed fraud or identity theft, Acima unlawfully refused to investigate unless the consumer provided a police report. Lastly, Acima might have improperly accessed and used consumer reports to target at-risk potential borrowers.
The CFPB’s lawsuit seeks a stop to alleged unlawful conduct, redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.
Read the CFPB’s press release here.
The complaint can be found here.