Attorney General James Secures $2.4 Million in Debt Relief for New Yorkers Misled by Predatory Debt Servicer

December 23, 2025

NEW YORK - New York Attorney General Letitia James today secured $2.4 million in debt relief and $175,000 in penalties, as well as other reforms, from Monterey Finance (Monterey), a financial services company that knowingly misled New York consumers with unlawful lease agreements disguised as traditional consumer financing agreements. An investigation by the Office of the Attorney General (OAG) found that until 2017, Monterey purchased and serviced payment plans for goods and services that were misleadingly presented to consumers to hide their exorbitant fees and other terms. Consumers who accepted these agreements believed they were purchasing a product or service. In reality, they were only leasing it, and were charged for monthly payments and fees that totaled well above the sticker price for the product or service they believed they were purchasing. In many cases, consumers paid more than 200 percent above the sticker price by the end of the transaction. Under a settlement with OAG, Monterey must cancel all outstanding leases in New York, pay $175,000 in penalties, stop collecting all outstanding debt from any leases, and make other reforms to end its deceptive and unlawful business practices. The agreement will provide approximately $2.4 million in debt relief to 835 New York consumers.

"Monterey preyed on consumers who needed financial assistance by charging illegal fees and deceiving them to make a profit," said Attorney General James. "These misleading tactics cost New Yorkers millions of dollars. I am proud to have secured debt relief for those affected by Monterey's deception and will always hold predatory lenders accountable."

Monterey partnered with businesses to service and collect on contracts that offered "financing" to consumers at the point of sale. While consumers believed they were receiving a traditional retail loan to purchase a product or service, these contracts were actually lease agreements. Under these agreements, consumers were charged fees on top of monthly payments, including fees at the beginning and end of their lease terms. Many consumers were shocked to find out that they did not actually own the items they purchased, such as family pets and wedding dresses, and would not own them until they paid a final fee.

Monterey collected on these lease agreements, often charging consumers additional fees to pay their monthly lease payments. These illegal pay-to-pay fees further drove up costs. Consumers who fell behind on their monthly lease payments were threatened with repossession or transfer to Monterey's nonexistent "legal department," even for purchases like pets. In these cases, consumers - who were led to believe they owned their pets - were advised to deliver their pets to shelters when they could not make their monthly payments.

Consumers ended up paying well above the sticker price for purchases made with Monterey's approved lease agreements. One consumer who signed a finance agreement to purchase a $2,000 puppy ended up paying $3,592.95 after all fees and monthly payments.

The OAG's investigation found that Monterey violated New York laws by misleading consumers and servicing lease agreements for services, such as car repairs, that cannot be returned and have no residual value. While lease-to-own agreements should give consumers the right to return items they are leasing if they no longer wish to continue making payments for them, Monterey did not allow customers to return goods they purchased.

Under a settlement with OAG, Monterey will pay $175,000 in penalties and cease collecting on any debt originated from a lease - erasing approximately $2.4 million in debt for New York consumers. Monterey will also cancel all of its leases in New York and request that Consumer Reporting Agencies erase any factors that negatively impacted a consumer's credit score due to its leases. In addition, Monterey cannot be involved with any leases for services, pets, and other goods with no clear resale value that cannot be leased.

Attorney General James is a leader in protecting New York consumers and businesses from predatory lenders. In April, Attorney General James sued payday lenders MoneyLion and DailyPay for taking advantage of New York workers with illegal high-interest loans. In January, Attorney General James secured a $1.1 billion judgment against Yellowstone Capital for its role in a predatory lending network targeting small businesses. In September 2024, Attorney General James secured more than $4.6 million for small businesses from Northern Leasing, which trapped businesses in overpriced leases for equipment. In August 2024, Attorney General James sued Acima for cheating New Yorkers with deceptive rent-to-own practices.

This matter was handled by Assistant Attorney General Julia K. Toce and Assistant Attorney General in Charge Deanna R. Nelson, under the supervision of Deputy Attorney General for Regional Affairs, Jill Faber. The investigation was conducted by Supervising Investigator Chad Shelmidine under the supervision of Assistant Chief Michael Leahy. The Attorney General's Investigations Division is led by Chief Oliver Pu-Folkes.