(Bloomberg) -- US regulators ordered OneMain Holdings Inc. to pay $20 million in redress and penalties, saying the personal loan installment lender deceived customers into taking on additional products and withheld interest from them.

OneMain will pay $10 million to refund customers and $10 million to the Consumer Financial Protection Bureau’s relief fund, according to a statement from the agency.

“OneMain pressured its employees to load up its loans with extra charges through false promises of easy cancellation with full refunds,” CFPB Director Rohit Chopra said. “We are ordering OneMain to refund borrowers it cheated and to clean up its business practices.”

Representatives for Evansville, Indiana-based OneMain said while it didn’t agree with the CFPB’s conclusions, it was pleased to resolve the matter relating to its refunding practices for some optional products.

“Our policies strictly prohibit packing optional products into loans, and if we find out an employee has violated these policies we take disciplinary action, including termination,” a spokesman said in an emailed statement.

OneMain has agreed to issue interest refunds to customers who received within the last four years a refund of their premium or fee through a check rather than a statement credit after canceling an optional product within 30 days of purchase, the company said in a separate statement. That group accounted for less than 1% of its customer base, according to the lender.

OneMain will also expand its 30-day full refund period for optional products to 60 days, it said.

The company’s shares fell 1.8% on Wednesday, but rallied about 2.5% to $38.79 on Thursday morning.  

Upselling claims

OneMain salespeople were incentivized to upsell loans by persuading customers to add on products like roadside assistance and identity theft coverage to their loans, according to the CFPB. Those executives were evaluated on their sales and could even face termination if they didn’t upsell enough, the CFPB said.

OneMain also failed to refund interest charged to 25,000 customers who cancelled add-on purchases within the “full-refund” period, which was generally 30 days, the CFPB said. OneMain allegedly kept $10 million of the interest charges over four years. 

The CFPB enforcement action also requires OneMain to change its cancellation practices, it said.

OneMain traces its roots back to Commercial Credit Corp, the Baltimore finance company that Sandy Weill used as a vehicle for a series of acquisitions that ultimately created Citigroup Inc., as well as Interstate Finance Corp., the finance company that became American General Finance, a unit of American International Group Inc.

Through its securitization program, OneMain is a routine participant in Wall Street’s bond market, where it packages thousands of personal loans into bonds for sale to investors. The program means that OneMain effectively gives some of the economic exposure of the loans to investors, but retains exposure to the loans, which remain fully on balance sheet from an accounting standpoint.

OneMain has sold $825 million of bonds backed by personal loans so far this year, after selling nearly $2.6 billion in such bonds last year, the most since 2015, according to data compiled by Bloomberg.

--With assistance from Charles Williams.

(Updates with share price movement in eighth paragraph, adds detail on securitization in penultimate paragraph.)

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