Westborough Lender Deceived Customers With Loans, Says Consumer Financial Protection Bureau

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Springstone Financial, a lender based in Westborough, has to refund $700,000, said the Consumer Financial Protection Bureau, after it was found to have deceived customers with a high-interest rate.

Federal regulators took action on Wednesday, deeming that Springstone “had a 22.98 percent interest rate that was not always disclosed to those who applied for it.”

The action applied to a loan product offered at 9,000 dental offices that was used to pay for dental work. The CFPB says Springstone led customers to believe that the product was interest free. The interest accrued from the date of the consumer’s purchase was charged if the balance was not paid in full before the promotional period ended. Approximately 3,200 consumers who signed up for the product ultimately were charged and paid deferred interest, announced the CFPB.

“Deceiving patients in need of medical care into paying for services with risky credit adds insult to injury,” said CFPB Director Richard Corday, in a statement. “The Bureau will not tolerate financial companies or their providers taking advantage of distressed patients and their loved ones with misleading sales pitches.”

According to the announcement, the Bureau’s investigation found that providers who were trained and monitored by Springstone to market the deferred-interest loan product misled consumers about the terms and conditions of the product during the application process. In some cases, dental office staff told consumers that the deferred-interest product was a “no-interest” loan and failed to mention they would have to pay 22.98 percent interest on the loan if they didn’t pay it off in full by the end of the promotional period. More than 3,200 consumers may have been affected by these deceptive practices.

CFPB is requiring Springstone to:

• Refund $700,000 to more than 3,200 consumers: Springstone must pay $700,000 in consumer relief to about 3,200 consumers as a result of the deceptive marketing and enrollment practices in its dental-services provider network.
• Conveniently repay consumers: Springstone will reimburse consumers affected by these practices. Eligible consumers do not have to take any action to get their refund. Springstone will notify affected consumers and issue a credit or send a reimbursement check to those consumers with an open Springstone account. For those consumers with a closed or inactive account, Springstone will mail a reimbursement check.

Find the full announcement here.