WASHINGTON: The Consumer Financial Protection Bureau (CFPB) announced on Monday (July 12) that it penalized an Atlanta-based financial technology firm $2.5 million for processing and servicing loans for customers who did not seek or authorize it. GreenSky, LLC is a smartphone app that connects merchants and banks with clients looking for funding for home improvement projects.
The Consumer Financial Protection Bureau also ordered the corporation to repay or cancel up to $9 million in loans that it permitted outside merchants to market and sell to customers.
The order is part of a broader investigation of fintech companies that automate the delivery and use of financial services via online platforms and mobile devices.
The lender acted unfairly toward customers, according to the agency, by failing to “develop and implement necessary and effective controls during the loan application, approval, and funding procedures,” as well as failing to “implement adequate merchant training and monitoring.”
The Consumer Financial Protection Act, which attempts to safeguard consumers from lenders who engage in unfair, misleading, or abusive conduct or practices, was allegedly breached by GreenSky, according to the CFPB’s order.
“GreenSky has agreed to pay a civil money penalty of US$2.5 million and to give remedies to eligible consumers where there is inadequate evidence of customer consent,” the firm stated in a statement on its website.
“We completely cooperated with the CFPB in the course of its investigation, and we respect and admire the critical role it serves in consumer protection,” stated GreenSky President Tim Kaliban.
Consumers who are looking to remodel their home can use GreenSky’s app to find a contractor who can finance their project. The merchant or contractor then submits an auto-populated loan application to GreenSky, which takes approximately a minute to complete and includes the client’s information. “GreenSky’s careless business and customer service practices enabled its merchants to take advantage of vulnerable consumers who needed financial help to repair their homes and pay for other critical retail services by setting up loans without their consent,” said Acting Director Dave Uejio of the Consumer Financial Protection Bureau. “It’s simply not right for customers to be in debt to GreenSky for loans they never knew about. The Consumer Financial Protection Bureau (CFPB) will not tolerate procedures that allow such behavior in the marketplace.”/n
