CFPB vs. Tempoe: What the $36M Case Means for Consumers
How a federal enforcement action against a leasing company reveals the risks of hidden terms and misleading retail finance offers.
The Consumer Financial Protection Bureau (CFPB) issued a major enforcement order against Tempoe, LLC, a nonbank finance company that partnered with retailers to offer lease financing on products like appliances, electronics, and furniture. According to the CFPB, Tempoe misled shoppers about the true nature and cost of its product, violated federal consumer protection laws, and is now required to provide tens of millions of dollars in consumer relief and penalties.
This article explains what Tempoe was doing, why regulators intervened, what relief consumers are receiving, and how you can recognize similar risks when you encounter “no credit needed” or alternative financing at the point of sale.
Who Is Tempoe and How Did Its Leasing Model Work?
Tempoe, LLC operated as a consumer leasing company based in Ohio and New Hampshire, working primarily through retail partners. Instead of offering traditional loans or store credit cards, Tempoe would:
- Purchase products or services directly from a retailer on the consumer’s behalf.
- Lease those products back to the consumer under a separate leasing agreement.
- Collect periodic payments over an initial term, often around five months.
- Offer options at the end of the initial term, such as continuing payments, returning the item, or paying an additional amount to own it.
Many consumers were offered Tempoe’s product only after being denied conventional financing by the retailer, making them more vulnerable to confusing or high-cost alternatives.
What Did Regulators Say Went Wrong?
The CFPB and a coalition of state attorneys general concluded that Tempoe’s conduct violated federal and state consumer protection laws in multiple ways. The core problems centered on:
- Misleading consumers about what they were signing up for.
- Hiding or obscuring key contract terms, including total cost.
- Unfair return and cancellation policies that trapped people in costly leases.
- Failure to provide required written disclosures under federal leasing rules.
1. Confusing Leases with Installment Purchases
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According to the CFPB and multiple state investigations, many consumers believed they were entering into a purchase or installment plan rather than a lease. Investigators found that:
- Tempoe’s marketing and sales interactions often described the product like a payment plan or financing, not clearly as a lease.
- References to leasing were sometimes minimized or pushed into fine print.
- The structure of the transactions and documentation made it difficult for consumers to understand that they would not own the product after making the initial series of payments.
Many consumers only realized they did not own the product at the end of the initial term—when they were told they would need to keep paying, return the item, or make an additional payment to gain ownership.
2. Lack of Meaningful Access to Terms and Disclosures
The CFPB found that Tempoe engaged in unfair acts and practices by failing to ensure that consumers had access to the transaction terms in a meaningful way.
- Key lease terms—including cost over time and nature of the agreement—were not clearly presented or explained before consumers committed.
- Tempoe was found to have violated Regulation M, which implements the Consumer Leasing Act, by not providing required disclosures for leases that extended beyond the initial term by six months or more.
- Some materials downplayed or buried references to the transaction being a lease.
The Consumer Leasing Act and Regulation M require lessors to provide standardized, written disclosures so consumers can evaluate the total cost of a lease and compare options before committing. When those disclosures are missing or unclear, people can easily underestimate how expensive a lease will be.
3. Unfair Return and Cancellation Restrictions
Tempoe’s business model included an initial period (often about five months) during which consumers made regular payments. The CFPB alleged that Tempoe maintained unreasonable return policies that effectively locked many consumers into continuing the lease:
- Consumers who tried to cancel after the first 30 days, but before the end of the initial term, were typically required to return the product to Tempoe—not the retailer.
- Tempoe allegedly refused to accept returns of many types of items, including large products, some services, and low-cost items below a certain price threshold.
- Because returns were effectively blocked in many cases, consumers had little real choice but to keep paying or exercise an additional purchase option.
The CFPB concluded that these policies were unfair because they trapped consumers in costly arrangements after they reasonably believed they could cancel or return the products.
The Financial Impact on Consumers
Investigations by the CFPB and 41 states plus the District of Columbia found that Tempoe’s practices caused substantial financial harm. Consumers frequently ended up paying far more than the original price of the products.
| Issue | Impact on Consumers |
|---|---|
| Misunderstanding the nature of the agreement | Consumers thought they were buying on installments, but were actually leasing and did not automatically own the product. |
| Lack of total cost transparency | Incomplete or unclear disclosures meant many did not realize the long-term cost could be two to three times the retail price. |
| Limited ability to return or cancel | Return restrictions forced consumers to continue payments or pay more to own the item. |
| Extended month-to-month leasing | Some consumers continued leasing for long periods, without required disclosures, increasing total expense. |
State attorneys general reported that the complicated lease structure and lack of required information often resulted in consumers paying two to three times the purchase price of goods and services.
What the CFPB Ordered Tempoe to Do
The CFPB’s consent order imposes sweeping remedies on Tempoe. The key components are:
- Permanent ban on consumer leasing – Tempoe is permanently prohibited from offering or providing consumer leases in the future.
- Release of existing leases – Tempoe must release all consumers with active leases and allow them to keep the products without owing any further money.
- In-kind relief – The value of the cancelled leases and retained merchandise totals about $33 million in relief to roughly 19,300 leases.
- Civil money penalty – Tempoe must pay a $2 million civil penalty, with $1 million remitted if it pays an equivalent amount to states that entered a parallel multistate settlement.
In parallel, state settlements collectively valued at about $35 million were announced, reinforcing the ban on future leasing and cancellation of outstanding contracts.
How the Tempoe Case Fits into Broader Consumer Protection Law
The enforcement action against Tempoe sits at the intersection of several key laws and regulatory priorities.
Consumer Financial Protection Act (CFPA)
The CFPB found that Tempoe engaged in unfair acts and practices under the Consumer Financial Protection Act of 2010 (CFPA). Under the CFPA, a practice is “unfair” if it:
- Causes or is likely to cause substantial injury to consumers.
- Is not reasonably avoidable by consumers.
- Is not outweighed by countervailing benefits to consumers or competition.
By obscuring lease terms, limiting returns, and failing to disclose total costs, Tempoe’s conduct was deemed to meet this standard of unfairness.
Consumer Leasing Act and Regulation M
The Consumer Leasing Act and its implementing rule, Regulation M, require clear written disclosures for consumer leases of personal property exceeding four months and a specified dollar threshold. Required disclosures typically include:
- Total of payments over the lease term.
- Number, amount, and timing of payments.
- Any purchase option terms and price or method of determining the price.
- Conditions and fees for early termination or late payment.
The CFPB concluded that Tempoe violated these requirements by failing to give proper disclosures to consumers whose leases continued month-to-month beyond six months after the initial term.
State Consumer Protection Statutes
Forty-one states and the District of Columbia also investigated Tempoe under state unfair and deceptive acts and practices (UDAP) laws. These laws generally prohibit:
- Misrepresenting the nature of a product, service, or financing.
- Omitting material information needed for consumers to make informed decisions.
- Structuring contracts in a way that is likely to mislead the average consumer.
Multistate settlements mirrored the CFPB’s remedies: permanent bans on consumer leasing, blanket cancellation of existing leases, and payments to states and the CFPB.
Practical Lessons: How to Protect Yourself from Similar Leasing Traps
The Tempoe case illustrates broader risks consumers may face when offered “alternative financing” at the checkout counter or online. To protect yourself:
1. Always Ask: Is This a Lease or a Loan?
- Directly ask the salesperson or online chat: “Will I own this item after making all scheduled payments, or is this a lease?”
- Look for words like “lease,” “rental,” “rent-to-own,” or “lease-purchase” in the documentation, even if the marketing uses terms like “no credit needed” or “easy payments.”
2. Demand the Total Cost in Writing
- Before you sign anything, request a written statement of the total amount you will pay if you follow the schedule through to ownership (or through the full term).
- Compare that total to the cash price of the same item. If it is dramatically higher, reconsider.
3. Check Return, Cancellation, and Early Buyout Rules
- Find out how long you have to cancel without penalty.
- Ask who must receive the returned product—the retailer or the leasing company—and whether returns are realistically possible (especially for large or installed items).
- Review any early purchase options: when you can exercise them and how the price is calculated.
4. Be Cautious After Credit Denial
- If you are turned down for traditional financing at the register, take a pause before accepting an alternative product.
- Consider waiting, saving, or exploring credit terms from your bank or credit union rather than making a rushed decision.
5. Know How to Get Help
- If you suspect you were misled into a lease, you can submit a complaint to the CFPB, your state attorney general, or a local consumer protection office.
- Keep all documents, emails, and screenshots related to the transaction.
Frequently Asked Questions (FAQs)
Q1: How much relief did consumers get in the Tempoe case?
The CFPB’s order requires Tempoe to provide approximately $33 million in in-kind relief by cancelling about 19,300 existing leases and allowing consumers to keep their products without further payments. Tempoe must also pay a $2 million civil penalty, coordinated with a multistate settlement.
Q2: Do affected consumers need to do anything to have their leases cancelled?
According to state settlement descriptions, consumers with existing Tempoe leases do not need to take action; their accounts are to be cancelled automatically, and they may retain possession of the leased merchandise without additional payments.
Q3: Is Tempoe allowed to offer leases in the future?
No. Under the CFPB consent order and related multistate settlements, Tempoe is permanently banned from engaging in consumer leasing activities going forward.
Q4: What if a company hides that an agreement is a lease—are there specific federal protections?
Yes. The Consumer Leasing Act and Regulation M require clear, written disclosures for qualifying consumer leases, including the total of payments, payment schedule, and any purchase option terms. Additionally, the CFPB can take action under the CFPA against unfair, deceptive, or abusive acts or practices.
Q5: How can I check whether an alternative financing product is regulated like a lease or like a loan?
Review the contract documents for references to “lease,” “rental,” or “Consumer Leasing Act” and look for standardized disclosure tables. If the product involves ownership transfer over time with finance charges, it may be covered by credit laws such as the Truth in Lending Act; if it grants temporary use of property with an option to buy, it may be a lease subject to Regulation M. When in doubt, ask the provider in writing how the product is classified and which federal law governs it.
References
- Tempoe, LLC – Consent Order Summary — Consumer Financial Protection Bureau. 2023-09-11. https://www.consumerfinance.gov/enforcement/actions/tempoe-llc/
- News Release: Multistate Settlement with Tempoe, LLC — National Association of Attorneys General (NAAG). 2023-09-11. https://www.naag.org/wp-content/uploads/2025/06/2023.09.11-DC-News-Release.pdf
- Attorney General Bailey Announces $35 Million Settlement with Leasing Company Tempoe, LLC — Missouri Attorney General’s Office. 2023-09-11. https://ago.mo.gov/attorney-general-bailey-announces-35-million-settlement-with-leasing-company-tempoe-llc/
- CFPB Issues Consent Order Banning Nonbank Consumer Finance Company from Offering Consumer Leases — Troutman Pepper Consumer Financial Services Law Monitor. 2023-09-20. https://www.consumerfinancialserviceslawmonitor.com/2023/09/cfpb-issues-consent-order-banning-nonbank-consumer-finance-company-from-offering-consumer-leases/
- Attorney General Jennings Announces $35 Million Settlement with Leasing Company Tempoe, LLC — Delaware Department of Justice. 2023-09-11. https://news.delaware.gov/2023/09/11/attorney-general-jennings-announces-35-million-settlement-with-leasing-company-tempoe-llc/
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