GreenSky Facilitated Lending Without Borrowers’ Consent: CFPB

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GreenSky was fined $ 2.5 million and was forced to repay up to $ 9 million in loans that fintech allegedly allowed its channel partners to borrow on behalf of clients who did not authorize funding, the Consumer Financial Protection Bureau said Monday.

The Atlanta-based company offers technology sellers that they can use to offer consumers installment loans at points of sale, which are mostly funded by its partner banks. GreenSky originally provided home improvement loans through retailers such as Home Depot, but has since expanded to other areas, including elective surgery.

Between 2014 and 2019, GreenSky received over 6,000 complaints from clients claiming they did not have permission to apply for a loan, according to CFPB.

Under an agreement with CFPB, GreenSky must now obtain proof of borrower authorization before activating a loan.

Under an agreement with CFPB, GreenSky must now obtain proof of borrower authorization before activating a loan.

Bloomberg

CFPB investigators have confirmed that in about 1,600 of these cases, the seller was at fault for applying for a loan without the borrower’s consent. CFPB Acting Director Dave Wedgio said on Monday in a press release announcing the agreement that GreenSky has “inadvertently” allowed its channel partners to take advantage of consumers.

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

“For consumers to be in debt to GreenSky on loans they never knew about is just wrong,” said Uejio.

GreenSky did not immediately respond to a request for comment.

GreenSky gives merchants the ability to collect financial information and make loans on behalf of customers through its software. Written confirmation from the borrower is required before applying for the loan, but CFPB claims GreenSky did not verify if these documents were in order until the consumer filed a complaint under the consent order.

GreenSky is now required to obtain proof of borrower authorization before activating a loan in accordance with an agreement with CFPB.

Bureau investigators also found that prior to October 2019, GreenSky allegedly allowed merchants to apply for loans for up to two months before going through a mandatory training program. The company is obliged to amend its training rules by order of the CFPB.

GreenSky’s in-house commercial risk division has also been more lenient in reviewing loan applications submitted by its major trading partners, according to CFPB.

In some cases, Seller Risk Officers have allegedly been instructed to “change their recommendations to suspend and discontinue trading based on the volume of business the seller creates,” the CFPB said in the consent order.

The Bureau found that approximately 100 CFPB cases had not been resolved for more than six months. The agreement requires GreenSky to refer staff to its Complaints Department and adhere to clear deadlines for resolving disputes, including providing “advance credit” within five days of receiving the complaint until the issue is resolved.



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