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CreditShield
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Credit Scams Exposed · No. 36

"Make Your Lease Payments on Time and Build Your Credit." 17 States Say Snap Finance's Pitch Wasn't True.

Snap Finance settled with 17 attorneys general over lease-to-own claims, including that on-time payments would raise your credit score. Here's what to know.

By · · 6 min read
"Make Your Lease Payments on Time and Build Your Credit." 17 States Say Snap Finance's Pitch Wasn't True.

You needed a mattress, a couch or a set of tires, and you didn’t have the cash. The store offered a lease-to-own plan at the register. No credit needed, small payments, and the clerk said paying on time would help your credit. That last part is what 17 state attorneys general say wasn’t true.

What happened

On October 21, 2026, the attorneys general of 17 states announced a settlement with Snap Finance, a company that offers lease-to-own plans through other stores’ checkout counters. Iowa and Nebraska led it. The other states are Arkansas, Florida, Georgia, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Dakota, Oklahoma, Texas, Utah, West Virginia and Wyoming.

The states said customers were told that leasing and paying on time could raise their credit scores, and “that was not the case.” They also said some people thought they’d signed up to pay things off in 100 days or less, then found out they were in longer, more expensive contracts. Other complaints: people couldn’t see their full contract, couldn’t reach anyone when they tried to return things, and got confusing payment terms.

Under the settlement, which the states call an Assurance of Voluntary Compliance, Snap:

  • Will cancel $662,102,518 in lease balances for 303,223 customers, who keep the merchandise.
  • Will pay $2.75 million to the states.
  • Can’t claim, directly or by hint, that applying for or using its leases will help raise your credit score.
  • Has to drop slogans like “same as cash,” “cash payoff” and “no additional fees required.”
  • Has to show the full terms before you sign, clearly explain your right to end the lease, and stop charging payments while a return is processed.

Snap did not admit or deny the allegations, and a settlement isn’t a finding that they’re true. The company cooperated with the investigation.

Why the pitch works

If your credit is thin or damaged, most doors are closed. This one is open, right at checkout, with no hard credit check. And the idea that steady payments build credit isn’t crazy. Payment history is the biggest factor in most credit scores, according to the CFPB. So when someone says your on-time payments will count, it sounds like the first fair deal you’ve been offered in a while.

That’s what makes this kind of claim dangerous. It borrows a true rule to sell a product the rule may not apply to.

Why it falls apart

A score can only count what’s on your report. Your credit score is built from what lenders and other companies send to Equifax, Experian and TransUnion. If a lease company doesn’t send your on-time payments to the bureau your next lender checks, those payments can’t help you there. The states didn’t spell out exactly why Snap’s claim was wrong. They said it was.

A lease isn’t a loan, and that cuts both ways. The CFPB sued Snap in 2023. On August 1, 2024, Judge Jill N. Parrish of the U.S. District Court for Utah threw out eight of the CFPB’s ten claims. She ruled that Snap’s older leases didn’t count as “credit” under the federal laws the CFPB relied on, including the Truth in Lending Act, the law behind the APR box on a loan. Snap’s older leases had an initial term of just 60 days, which the court said mattered. The CFPB dropped the rest of the case, its credit reporting claims, on May 27, 2025.

So a lease doesn’t come with an APR you can compare to a card or loan. Your protection comes from your state’s rental-purchase law instead. That’s what these 17 states used.

The real price was the long contract. According to the court’s summary of the CFPB’s complaint, Snap’s older leases scheduled twelve months of automatic bank debits, “typically amounting to more than double the cash price” of the item. Those are the CFPB’s allegations, never proven. But do the math on a $1,000 mattress. More than double means more than $2,000 if you didn’t catch the early payoff deadline.

The arithmetic nobody mentions

$662 million is a big headline. Divide it by 303,223 people and it’s about $2,184 each.

But look at who qualifies. Relief goes to people who signed in a participating state from 2017 to 2022, whose accounts Snap still held in November 2025 and had marked “charged off.” Charged off means a company has written the account off as a loss on its books, though it can still try to collect. So much of that $662 million is debt Snap had already written off. The new cash in the deal is $2.75 million, or about $9 per person in the settlement, and it goes to the states, not to customers.

There’s a second cost, too. If you scraped together every payment and paid a lease off in full, you get nothing from this. Same if you live in one of the 33 states that didn’t join. The people who did what they were told get the least relief.

What to do

All of these are free.

  • Check whether you’re covered. If you had a Snap lease from 2017 to 2022 in one of the 17 states and fell behind, the states say cancellation is automatic. Texas has the most people covered, 148,295 accounts. Contact your state attorney general’s consumer office if you’re not sure.
  • Pull your reports. Get your free reports from all three bureaus at AnnualCreditReport.com. Look for a Snap or lease account. If one shows up, make sure the balance and status are right once it’s cancelled.
  • Dispute what’s wrong. Under 15 U.S.C. § 1681i(a)(1)(A), the bureau must investigate a dispute for free, generally within 30 days. If the information turns out to be inaccurate or can’t be verified, § 1681i(a)(5)(A) says it must be deleted or corrected. That’s a dispute for investigation, and results vary.
  • Before any lease, ask two questions. Which bureaus do you report to? Do you report on-time payments, or only missed ones? Get the answer in writing. Then look at the total cost of the full term, not just the payment.
  • If you’re trying to build credit, use a product made for it. The CFPB points to secured credit cards and credit builder loans. Read the fine print on those too. I wrote about one credit builder loan trap last month.

My own position, plainly: CreditShield is a free do-it-yourself credit app with a one-time $47 Full Access upgrade. It helps you find and dispute errors. It can’t make a lease report your payments, and nothing you buy can promise a score change. If you’re stuck, bring your question to our free community on Skool. This article is education, not legal advice.

Sources

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