A FinTech company engaging in origination and servicing activities settled CFPB charges for facilitating and processing loans to consumers who did not request them.
The CFPB found that the FinTech company, which relied on merchants to market and intake loan applications from consumers at the point of sale, used processes that enabled merchants to submit loan applications online without consumers' knowledge or consent. According to the Consent Order, the CFPB found that the FinTech company received at least 6,000 complaints between 2014 and 2019 from consumers who stated they did not authorize submission of a loan application. Some consumers became aware of the loan for the first time when they noticed the FinTech company's name on their credit report, or received billing statements, collection letters and calls from company.
As a result, the CFPB found that the company engaged in unfair acts and practices in violation of 12 USC 5531 ("Prohibiting unfair, deceptive, or abusive acts or practices") and 12 USC 5536 ("Prohibited Acts").
To resolve the charges, the company agreed to, among other things, (i) refund or cancel up to $9 million in loans for affected consumers, (ii) pay a $2.5 million civil money penalty, and (iii) implement new procedures intended to prevent future fraud.
Primary Sources
- CFPB Press Release: CFPB Takes Action Against Fintech Company GreenSky for Enabling Merchants to Secure Loans for Consumers Without Their Authorization
- CFPB Order: Greensky, LLC
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