GreenSky pays $11.9 million for unauthorized consumer loans
The CFPB has issued a consent order against GreenSky, LLC, a limited liability company with its principal place of business in Atlanta, Georgia. The CFPB said that GreenSky enabled contractors and other merchants to take out loans on behalf of thousands of consumers who did not request or authorize them.
The CFPB found that GreenSky engaged in unfair practices against their customers in violation of the Consumer Financial Protection Act of 2010 (CFPA). The violations involved the company’s loan origination and servicing activities, which included:
- Processing and servicing unauthorized loans: GreenSky serviced and facilitated the origination of loans to consumers who did not request or authorize them. Between 2014 and 2019, GreenSky received at least 6,000 complaints from consumers who stated they did not authorize submission of a loan application. The company’s complaint investigations found that in at least 1,600 instances its merchants were at fault.
- Structuring the GreenSky Program in a manner that enabled unauthorized loans: GreenSky failed to create and implement appropriate and effective controls during the loan application, approval, and funding processes, failed to implement adequate merchant training and oversight, and neglected to effectively manage consumer complaints.
Under the order, GreenSky must:
- Refund and cancel loans for harmed consumers: GreenSky will provide up to $9 million in cash refunds and loan cancellations.
- Pay a civil penalty: GreenSky will pay $2.5 million to the CFPB, which will be deposited into the CFPB’s Civil Penalty Fund
- Prevent future abuses: GreenSky is required to prevent future illegal practices by verifying consumers’ identities and confirming their authorizations prior to activating loans or disbursing loan proceeds. GreenSky must also implement an effective consumer complaint management program, exercise effective oversight of third-party merchant partners, and implement consistent standards to govern the write-off of illegal loans.