Florida Attorney General sues Marlin Financial over loan practices

The Florida Attorney General is suing Marlin Financial, an online auto loan company. Pictured is its office in downtown Miami in December 2017. | [MALENA CAROLLO | Times (2017)]
The Florida Attorney General is suing Marlin Financial, an online auto loan company. Pictured is its office in downtown Miami in December 2017. | [MALENA CAROLLO | Times (2017)]
Published Dec. 5, 2018

Florida Attorney General Pam Bondi's office is suing online auto lender Marlin Financial for what it says are unfair and deceptive trade practices.

In a civil lawsuit filed in Hillsborough County in late November, the state's legal arm alleged that an add-on the lender said was optional "was in fact a mandatory feature of loans made to consumers." That add-on, known as a "debt cancellation product," was marketed to customers as an insurance-like product that would wipe out a customer's remaining debt if their car was totaled. Instead it dramatically increased the cost of the loans.

Marlin's debt cancellation product was the focus of a September Tampa Bay Times investigation into the company. It found that Marlin saddled consumers with significantly more debt than they expected, charged interest rates above state limits and failed to give some customers access to items in cars that were repossessed when they couldn't keep up with their payments. For Marlin customers whose contracts the Times reviewed, the debt cancellation cost 125 percent of their loan on average.

Following Times inquiries, the Attorney General's Office launched an investigation into Marlin. Representatives for the Miami-based lender did not return a request for comment early Wednesday afternoon.

The attorney general considers the debt cancellation product mandatory, the lawsuit says, because of the conditions a customer had to meet to decline it and still take out a loan. A customer would need to have pre-paid, full comprehensive and collision auto insurance with a deductible of no more than $250 for the lender to agree to waive debt cancellation.

"Borrowers found such insurance coverage either impossible or virtually impossible to purchase," the lawsuit says.

Because the product is a condition of taking out a loan with Marlin, the company should have included the fee for it in its calculation of the loan's interest rate, which Marlin did not, the lawsuit says. Marlin also charged interest on the debt cancellation "as if it were part of the financing agreement."

This led to some customers' cars being improperly repossessed and later sold, the lawsuit says, as customers defaulted when they could not make their high payments.

The attorney general is asking for a $10,000 penalty for every unfair and deceptive trade practices act, $15,000 for instances that affected senior citizens.

"It should be noted that generally enforcement actions pursued by our office do not affect a consumer's right to pursue legal remedies," said Whitney Ray, director of communications for the state Attorney General's Office, in a statement Wednesday.

In a temporary injunction signed by Marlin's president, Jeremy Tolan, and the Attorney General's Office, Marlin agreed not to offer debt cancellation on any new, refinanced or renewed loans. It also cannot collect debt cancellation charges on outstanding loans, including ones that customers have already defaulted on, unless those collections are put into an escrow account from which Marlin cannot make any withdrawals.

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Marlin also is prohibited from charging its customers interest on the debt cancellation and from repossessing or selling any repossessed vehicle where the customer defaulted because of the rates charged that included the debt cancellation cost.

As part of the injunction, Marlin is required to provide the attorney general with information about the debt cancellation charged on loans from 2014 to the present. For all loans the company issued that are currently in good standing, Marlin is required to modify the payments to exclude any debt cancellation charges.

Marlin must consult with the attorney general, the injunction says, about what to do with any vehicles it has that were repossessed because of the inclusion of the debt cancellation in the loan.

The company stopped taking new loans in late September following the investigation. U.S. Rep. Charlie Crist called for the Consumer Financial Protection Bureau to investigate Marlin following the Times' investigation. In a letter, acting director of the bureau, Mick Mulvaney, said the federal consumer watchdog was "evaluating actions we might take in response."

"I applaud the state for taking action, sending a strong signal that if you abuse consumers you will not get away with it," Crist said in a statement about the lawsuit. "I hope to see the Consumer Financial Protection Bureau join the state in holding these bad actors accountable."

Contact Malena Carollo at or (727) 892-2249. Follow @malenacarollo.