Class Action Claims American First Finance Installment Payment Agreements Amount to Unlawful Loans

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A proposed class action claims American First Finance (AFF) has issued what amount to unlawful loans for the purchase of consumer goods and services without disclosing the terms of the agreements to borrowers.

According to the case, customers who financed goods and services from certain retailers with whom AFF had a preexisting agreement were unaware that they had entered into a loan with the company at interest rates in excess of 120 percent. Per the suit, AFF is not licensed to offer or collect on loans in California and had no right to receive any principal, charges or other recompense in connection with its allegedly unlawful agreements with consumers.

The lawsuit alleges consumers have been damaged by AFF’s conduct in that their personal information was shared with the company without their consent. Moreover, the complaint says consumers have ultimately paid for financing that they did not agree to and at undisclosed terms, including “exorbitant” interest rates.

The lawsuit states that AFF contracts with retailers to offer loans to their customers for the purchase of goods and services through installment payment options. According to the case, AFF targets customers with “poor or little to no credit” and offers loans of up to $5,000 with “almost instant credit approvals.”

The suit alleges, however, that retailers’ customers are not told at the time of purchase that they are entering into an agreement with AFF, the case says. Similarly, the terms of these agreements are also not disclosed to consumers at the time of purchase, according to the filing.

The lawsuit claims AFF is not licensed to issue loans in California and mischaracterizes the agreements as “after-the-fact assignments of retail installment sales contracts.” The loan documents, the case says, demonstrate that the purchase contracts were never “assigned” to AFF by its retail partners but were instead generated on an AFF form and purport to obligate customers to contact AFF alone with regard to their loans, according to the complaint.

The plaintiff, a Sacramento County, California resident, says he purchased in September 2017 wheels and tires from a retailer in the state for a total of $2,292.00. At the time of the purchase, the plaintiff was not informed that the sale was financed with AFF or apprised of the financing terms, according to the suit. Moreover, the retailer allegedly informed the plaintiff that if the full amount of the purchase was paid off within 100 days, he would not pay any interest. 

According to the suit, although AFF prepared a seven-page security agreement specifying an annual percentage rate of 144.59 percent, the plaintiff was never shown the agreement and did not sign it. The suit says the defendant went on to debit the plaintiff’s account $92.28 in early October 2017 and twice a month thereafter.

Per the case, the plaintiff was “surprised and alarmed” to discover that AFF had set up automatic electronic payments when he checked his bank account four days after buying the wheels and tires. After contacting the company, the plaintiff instructed AFF to withdraw sufficient funds to pay off the balance within 100 days of his purchase, according to the filing.

The case alleges that when the plaintiff checked his bank account roughly 100 days later, he was upset to find that AFF had not withdrawn sufficient funds to cover the balance and was subjecting him to interest payments. After several unsuccessful attempts to obtain a copy of his loan agreement from AFF, the plaintiff “was shocked to learn” that the interest rate on the loan was 144.59 percent and that he would be paying in interest more than the price of the wheels and tires, the suit relays.

Per the case, the plaintiff filed a complaint with AFF and stopped all automatic withdrawals, after which the defendant began a collection campaign against him, per the suit.

The lawsuit argues that the plaintiff was never provided with a copy of the loan agreement at the time of purchase or notified by AFF of the terms of the agreement. According to the case, the plaintiff would not have purchased the wheels and tires had he known “the true terms of the loan.”

The suit looks to cover California residents who, at any time between November 11, 2014 and the date of class certification, purchased consumer goods or services from AFF-affiliated retailers and who AFF claims are or were bound to the terms of its security agreements.

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