Snap Finance Lawsuit: CFPB Claims, Dismissal, and PA Settlement

The Snap Finance lawsuit was a federal enforcement action the Consumer Financial Protection Bureau filed in July 2023, accusing the Utah lease-to-own lender of deceiving customers, hiding the true cost of its financing, and using false threats to collect payments. A federal judge in Utah dismissed most of the Bureau’s claims in August 2024 after ruling that Snap’s lease-to-own agreements are not “credit” under federal law. The CFPB voluntarily dismissed the remaining claims with prejudice on May 27, 2025, ending the case.¹

What the CFPB Accused Snap Of Doing

The complaint, filed July 19, 2023, in the U.S. District Court for the District of Utah as case 2:23-cv-00462, named Snap Finance LLC, Snap RTO LLC, Snap Second Look LLC, and two holding companies. The Bureau alleged violations of the Consumer Financial Protection Act, the Truth in Lending Act and Regulation Z, the Electronic Fund Transfer Act and Regulation E, and the Fair Credit Reporting Act and Regulation V. An amended complaint followed on August 28, 2024.¹

The “100 Day Cash Payoff” Marketing

Snap heavily advertised a “100 Day Cash Payoff” option, and the CFPB said the company never adequately explained what claiming it required. Customers who assumed their scheduled automatic payments would satisfy the option often missed the deadline, because the option actually required them to schedule separate manual payments or make a lump-sum balloon payment. Those who missed the window paid far more than the cash price of the goods.²

How the Contracts Were Signed

The Bureau said the signing process itself hid key terms. Transactions were completed on merchant tablets, and merchants frequently signed and submitted agreements on behalf of consumers before those consumers had a chance to read them. Customers were required to pay processing fees before ever seeing a full summary of terms, and Snap gave merchant partners no written guidance for explaining the agreements accurately.²

Collection Threats and Blocked Cancellations

The CFPB described Snap’s collection emails as deceptive, warning of “further action” for nonpayment despite the company having no history of repossessing merchandise or suing customers over missed payments on these agreements. The Bureau said Snap sent these warnings not only to customers who were behind, but also to those who were current, had already paid in full, or had not yet received their goods.²

Getting out of an agreement was allegedly just as hard. The CFPB said customers were told they could not cancel unless the merchant agreed to take the merchandise back, and internal training materials “strongly discouraged” employees from accepting surrender requests. Between January 2017 and January 2020, Snap entered into nearly 1.7 million rental-purchase agreements and permitted merchandise surrenders in only 165 of them. Customers who wanted out were often pushed into new “buy-back” settlement agreements instead.²

Why the Court Threw Out Most of the Case

On August 1, 2024, Judge Jill N. Parrish dismissed eight of the CFPB’s ten claims. The decision rested on a single question: are Snap’s lease-to-own agreements “credit” under federal law? Judge Parrish concluded they are not.³

The court found that Snap’s legacy lease agreements provided for a “substantially contemporaneous exchange of value.” Customers were paying for rolling 60-day periods of possession rather than borrowing money and repaying it over time. They were not bound to pay the total lease amount up front, Snap retained a contractual right to repossess the property, and customers had a conditional right to surrender it. The CFPB argued that Snap’s practical choice not to exercise its repossession rights effectively gave consumers a “right to defer payment,” the phrase at the heart of the statutory definition of credit. The court rejected that reading. Unless customers themselves invoked a right to defer payment, Judge Parrish wrote, the arrangement “simply does not create a credit arrangement.”⁴

Because the agreements were not credit, the claims that depended on TILA, EFTA, and the linked CFPA provisions fell with them. Only two claims survived, both under the Fair Credit Reporting Act.³

How the Case Ended

The CFPB filed a notice of voluntary dismissal with prejudice on May 27, 2025, ending the case entirely and barring the Bureau from refiling the same claims. The Bureau gave no public explanation.¹

Snap CEO Ted Saunders said in a statement that the outcome “reaffirms what we’ve maintained from the start.”⁵⁶⁷

The Separate Pennsylvania Settlement

The federal case was not Snap’s only enforcement matter, and the two are easy to confuse. Weeks before the CFPB filed its complaint, the Commonwealth of Pennsylvania reached an $11.4 million settlement with Snap Finance and its affiliates on May 12, 2023, resolving a state investigation into the company’s rent-to-own practices. It included $7.3 million in restitution to Pennsylvania consumers, $3.15 million in write-offs of delinquent balances, $750,000 in attorneys’ fees, and $200,000 in civil penalties. As part of the debt relief, 493 accounts that had already paid the full cash price, sales tax, and processing fees had their remaining balances reduced to zero.⁸

The Pennsylvania consent decree also imposed permanent changes on Snap’s operations in that state, including a ban on using the slogan “cash payoff” and on describing its lease-purchase transactions as “loans,” “credit,” or “financing” without clear and conspicuous disclosures. Snap agreed to disclose account balances plainly on servicing calls and in the customer portal, to stop demanding bank statements as a condition of refunding unauthorized withdrawals, and to submit to annual merchant-guideline reviews for five years plus four independent audits.⁸ The Pennsylvania resolution stands on its own; the federal dismissal does not disturb it.

What the Outcome Means for Lease-to-Own Regulation

Judge Parrish’s ruling carried weight beyond this one company. It established that lease-to-own financing, as structured by Snap, does not meet the federal statutory definition of “credit” and is not subject to TILA, EFTA, or the linked CFPA provisions. The CFPB had been pursuing what amounted to an expansion of its regulatory reach over the lease-to-own industry, and the court rejected the theory. The reasoning was cited when the Bureau dropped its parallel case against Acima on similar allegations.⁷

The dismissal with prejudice closes the door on these specific claims against Snap. The broader question of how lease-to-own products should be classified under federal consumer-finance law is one regulators, industry, and consumer advocates are likely to revisit.

1
Consumer Financial Protection Bureau. CFPB v. Snap Finance LLC Enforcement Action
2
Katten. CFPB Sues Snap Finance
3
Bloomberg Law. CFPB Suit Over Snap Finance Lease-to-Own Contracts Mostly Tossed
4
The WBK Firm. CFPB v. Snap Finance LLC, Memorandum Decision and Order
5
Snap Finance. CFPB Dismisses Lawsuit With Prejudice
6
Bloomberg Law. CFPB Drops Remaining Claims Against Lease-to-Own Company Snap
7
Katten. CFPB Drops Challenge That Lease-to-Own Agreements Be Regulated as Credit
8
Pennsylvania Attorney General. Snap Finance Consent Petition for Final Decree