US consumer watchdog orders GreenSky to pay fine for credit abuse

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Signage is visible at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, DC, United States on May 14, 2021. REUTERS / Andrew Kelly

WASHINGTON, July 12 (Reuters) – The United States’ Consumer Financial Protection Bureau (CFPB) on Monday announced it has fined an Atlanta-based fintech company $ 2.5 million for processing and handling loans to consumers who have not requested or authorized them to do so.

GreenSky, LLC (GSKY.O) is a mobile app that connects merchants and banks with customers who typically seek financing for most home improvement projects.

The CFPB also ordered the company to repay or cancel up to $ 9 million in loans it allowed outside merchants to promote and offer to consumers.

This order is part of a scrutiny of fintech companies automating the delivery and use of financial services through online platforms and devices, such as mobile phones.

The agency found that the lender had acted unfairly to consumers by failing to “create and implement appropriate and effective controls during the loan application, approval and financing processes”, as well as by failing to “implement adequate training and supervision of traders”.

The CFPB said in its order that GreenSky violated the Consumer Financial Protection Act, which seeks to protect consumers from lenders who engage in unfair, deceptive or abusive acts or practices.

In a statement posted on its website, the company said that “GreenSky has agreed to pay a civil fine of $ 2.5 million and provide redress to eligible consumers when there is insufficient evidence of customer authorization “.

“We have fully cooperated with the CFPB in its investigation and respect and appreciate the important role it plays in consumer protection,” said GreenSky Chairman Tim Kaliban.

Consumers looking to renovate their home can seek the services of a contractor who offers financing through the GreenSky app. The merchant or entrepreneur then submits an auto-completed loan application to GreenSky including customer data, which takes about a minute.

“GreenSky’s negligent business and customer service practices enabled its merchants to take advantage of vulnerable consumers who needed financial assistance to repair their homes and pay for other essential retail services by setting up loans without the consent of consumers, ”said Dave Uejio, acting director of CFPB.

“For consumers, getting into debt with GreenSky for loans they had never heard of is just plain wrong. The CFPB will not support practices which allow such conduct in the market. “

Reporting by Katanga Johnson in Washington, DC; Editing by Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.


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