* 13 states accuse OneMain ( OMF ) of deceptive add-on sales

practices

* States seek fines, restitution, and forfeiture of

illegal profits

* OneMain ( OMF ) settled with CFPB in 2023

* OneMain ( OMF ) denies allegations, says it complies with laws

By Jonathan Stempel

NEW YORK, March 16 (Reuters) - A bipartisan group of 13

U.S. state attorneys general sued OneMain ( OMF ) on Monday,

accusing the subprime lender of charging cash-strapped borrowers

hundreds or thousands of dollars for "add-on" products they did

not request and do not need, saddling them with hundreds of

millions of dollars in extra costs.

In a complaint filed in Manhattan federal court, attorneys

general led by New York's Letitia James and Pennsylvania's David

Sunday said OneMain ( OMF ) rewards loan closers, branch managers and

district managers with commissions and gift cards for selling

"extremely expensive" credit insurance, term life insurance, and

lifestyle- and health-related membership plans that have little

value.

The attorneys general also said OneMain ( OMF ) instructs employees

to wait until borrowers are ready to close their loans to

pressure them into buying the add-ons, and not to back off

unless borrowers say "no" three times.

"OneMain's ( OMF ) unlawful add-on and refinancing practices leave

many of its customers significantly worse off than they

bargained for when they came to the company for financial

relief," the complaint said.

The Evansville, Indiana-based company lends to people who

may otherwise have limited access to credit.

OneMain ( OMF ) agreed in May 2023 to pay $20 million to settle U.S.

Consumer Financial Protection Bureau charges that it pressured

employees to sell add-ons to meet sales targets, tricked

borrowers into buying add-ons, and failed to refund interest to

borrowers who cancelled. It did not admit or deny wrongdoing.

In a statement, OneMain ( OMF ) called the states' allegations

"simply untrue" and an attempt to relitigate issues the CFPB

resolved.

"We operate honestly and transparently, in full compliance

with all laws and regulations, as we provide responsible and

much needed access to credit for hardworking Americans," OneMain ( OMF )

said. "We will litigate this case vigorously and look forward to

proving the truth in court."

The states are seeking civil fines, restitution to customers

and the forfeiture of illegal profit for alleged violations of

the Consumer Financial Protection Act of 2010, part of the

Dodd-Frank financial reforms, and state consumer protection

laws.

Other states joining the lawsuit are Colorado, Maryland,

Nevada, New Hampshire, New Jersey, North Dakota, Oklahoma, South

Dakota, Virginia, Washington and Wisconsin.

OneMain ( OMF ) was once owned by Citigroup ( C ), which sold it in

2015.

In afternoon trading, OneMain ( OMF ) shares were up 23 cents at

$52.29.