GreenSky was fined $ 2.5 million and ordered to repay up to $ 9 million in loans that fintech allegedly authorized its merchant partners to take out on behalf of clients who did not authorize the funding, the Consumer Financial Protection Bureau announced Monday.
The Atlanta-based company provides merchants with technologies that merchants can use to provide consumers with point-of-sale installment loans that its partner banks primarily fund. GreenSky initially facilitated home improvement loans through retailers such 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 claiming that they had not been authorized to submit a loan application, according to the CFPB.
CFPB investigators confirmed that in about 1,600 of these cases, the merchant was responsible 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 “reckless” to allow its merchant partners to take advantage of consumers.
Some consumers claimed they had never heard of GreenSky until the bills for their loan payments arrived in the mail. In some cases, GreenSky has worked with borrowers to resolve issues, but there have been at least 2,800 instances in which the consumer who complained about an unauthorized loan has not received a refund or write-off, according to the CFPB. consent order.
“For consumers, getting into debt with GreenSky for loans they had never heard of is just plain 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, in accordance with the consent order.
GreenSky is now required to obtain proof of authorization from a borrower before activating the loan, according to the agreement with the CFPB.
Bureau investigators also found that prior to October 2019, GreenSky allowed merchants to submit loan applications up to two months before completing a mandatory training program. The company is required to change its training rules by order of the CFPB.
According to the CFPB, GreenSky’s own merchant risk management unit has also been more lenient in reviewing loan applications submitted by its larger merchant partners.
In some cases, employees of the merchant risk division have reportedly been instructed to “modify their recommendations regarding merchant suspensions and terminations based on the volume of business generated by a merchant,” the CFPB said in the order. on consent.
In about 100 cases examined by the CFPB, a resolution was not reached for more than six months, the office found. GreenSky is required under the agreement to dedicate staff to its complaints department and to follow clear deadlines for dispute resolution, including providing an “interim account credit” within five days of receiving a complaint. ” a complaint until the problem is resolved.