GreenSky facilitated loans without borrowers’ consent: CFPB

GreenSky has been fined $2.5 million and forced to refund up to $9 million in loans the fintech allegedly allowed its merchant partners to take out on behalf of customers who hadn’t authorized the financing, the Consumer Financial Protection Bureau said Monday.

The Atlanta-based company offers technology merchants can use to offer point-of-sale installment loans to consumers that its partner banks essentially fund. GreenSky initially facilitated home improvement loans through such retailers as Home Depot but has since expanded into other areas, including elective surgery.

From 2014 to 2019, GreenSky received more than 6,000 complaints from customers who claimed they had not authorized submitting a loan application, according to the CFPB.

Under its agreement wit the CFPB, GreenSky is now required to obtain evidence of a borrower’s authorization before activating a loan.


CFPB investigators confirmed that in about 1,600 of these cases the merchant was to blame for submitting a loan application without the borrower’s consent. CFPB Acting Director Dave Uejio said in a press release Monday announcing the consent order that GreenSky was “careless” to enable its merchant partners to take advantage of consumers.

Some consumers claimed they had never heard of GreenSky until bills for their loan payments arrived in the mail. In some cases, GreenSky did work with borrowers to resolve the issues, but there were at least 2,800 instances in which the consumer who complained about an unauthorized loan received neither a refund nor a write-off, according to the CFPB consent order.

“For consumers to wind up in debt to GreenSky for loans they never knew about is simply wrong,” Uejio said.

GreenSky did not immediately respond to a request for comment.

GreenSky gives merchants the ability to collect financial information and submit loans on behalf of customers through its software. Written confirmation from the borrower is required before submitting loan applications, but the CFPB alleged that GreenSky did not review whether these documents were in order until a consumer filed a complaint, according to the consent order.

GreenSky is now required to obtain evidence of a borrower’s authorization before activating the loan, according to the agreement with the CFPB.

Bureau investigators also found that before October 2019, GreenSky was allegedly allowing merchants to submit loan applications for up to two months before going through a mandatory training program. The company is required to make changes to its training rules under the order from the CFPB.

GreenSky’s own merchant risk unit also was found to be more lenient in reviewing loan applications submitted by its biggest merchant partners, according to the CFPB.

In some cases, employees within the merchant risk division were allegedly instructed “to change their recommendations regarding merchant suspensions and terminations based on the volume of business a merchant generates,” the CFPB said in the consent order.

In about 100 cases reviewed by the CFPB, a resolution was not reached for more than six months, the bureau found. GreenSky is required under the agreement to devote staff to its complaint department and follow clear timelines for resolving disputes, including providing a “provisional account credit” within five days of receiving a complaint until the issue is resolved.

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