Some New Yorkers paid more than double the price for items they thought they owned. The state now says they shouldn’t have owed a dime.
Attorney General Letitia James announced a settlement that delivers $2.4 million in debt relief to 835 New Yorkers misled by Monterey Finance, a debt servicer that disguised lease agreements as traditional consumer financing.
Leases sold as purchases
State investigators found Monterey partnered with retailers to offer what looked like standard financing at checkout. Consumers believed they were buying items or services. In reality, they were signing lease agreements.
Those leases came with stacked fees at the start and end of the term, plus monthly payments. By the time the contracts ended, many consumers paid more than 200 percent above the sticker price.
In one example cited by the attorney general’s office, a consumer who believed they were buying a $2,000 puppy paid $3,592.95 after fees and monthly charges.
Fees, threats, and shocking consequences
Monterey also charged illegal “pay-to-pay” fees just to make monthly payments, further inflating costs.
When consumers fell behind, Monterey threatened repossession or referral to a so-called “legal department” that investigators found did not exist. In some cases involving pets, consumers who believed they owned their animals were told to surrender them to shelters when they could not keep up with payments.
The investigation also found Monterey serviced leases for services, such as car repairs, that cannot be returned and have no resale value. Despite that, consumers were not allowed to return items to end their obligations.
What the settlement requires
Under the agreement with the Office of the Attorney General, Monterey must:
• Cancel all outstanding leases in New York
• Stop collecting any remaining lease-related debt
• Provide about $2.4 million in total debt relief
• Pay $175,000 in penalties
• Ask credit reporting agencies to remove negative credit impacts tied to its leases
• Stop participating in leases for services, pets, and other goods with no clear resale value
“Monterey preyed on consumers who needed financial assistance by charging illegal fees and deceiving them to make a profit,” James said. “These misleading tactics cost New Yorkers millions of dollars.”
Part of a broader crackdown
The case adds to a growing list of enforcement actions led by James against predatory lenders and deceptive financing practices.
Her office has recently taken action against payday lenders, merchant cash advance companies, and rent-to-own businesses accused of misleading New Yorkers and skirting state law.
State officials say the Monterey settlement sends a clear message: contracts that hide true costs and ownership terms won’t be tolerated.
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