GreenSky Class Action Lawsuit Alleges Predatory Lending Tactics

A California woman recently filed a GreenSky class action lawsuit against the lender, alleging the company engaged in predatory lending tactics that violated state lending laws and consumer protection laws.

The plaintiff, Elizabeth Belyea, alleges that GreenSky’s very business model is illegal, as it takes undisclosed finance charges on consumer loans, which the lawsuit says is “in clear violation of the CFL,” or California Financing Law.

Belyea, a retired teacher and administrator, began supplementing her retirement income by renting a house that she owns, her lawsuit states. After tenants renting the house began experiencing drainage problems in June 2019, the lawsuit alleges Belyea contracted a plumber, who referred her to an affiliate lender (GreenSky) to help her finance the bills.

The plumber allegedly told her that if the loan were paid back within eighteen months, interest would be waived but if she were to pay it back over the loan’s seven-year lifespan, interest would have more than tripled the original cost of the bill, Belyea alleged. To avoid having to pay that kind of interest, Belyea says that she took out retirement funds just a couple of months later in order to pay off the loan immediately.

Still, GreenSky collected a “merchant fee” on Elizabeth’s loan, which the lawsuit argues is an unlawful financing charge. Mortgage companies and other lenders are currently being investigated for other potentially unlawful practices, such as “pay to pay” fees and illegal debt collection.

Essentially, the lawsuit claims, GreenSky is a “rent-a-bank” scheme, giving the actual lending power to contractors and making money through what the lawsuit calls “de facto finance charges” on the consumer loans, though GreenSky refers to these charges as “merchant fees.”

However, the lawsuit claims that the company takes, on average, about 10 percent of the principal amount of the lending payment—and doesn’t disclose this amount to consumers. By referring to these charges as “merchant fees” and downplaying how high the costs are, the company claims that the usual slew of state lending laws and consumer protection laws don’t apply. By contrast, the banks it partners with are required by the Truth in Lending Act to reveal all of their administrative fees—including relatively minor ones.

“GreenSky does not simply service or administrate consumer loans that have already been made: rather, it secures funding sources for itself, originates loans, and collects finances charges thereon. This arrangement on an unlicensed basis is plainly illegal in California,” the lawsuit argues.

The GreenSky class action lawsuit alleges that GreenSky’s process has ultimately hit homeowners with severely inflated costs.

Belyea filed her GreenSky class action lawsuit on behalf of herself and all other California consumers in a similar situation, alleging that GreenSky violated California Financing Law, the Credit Services Act of 1984, California’s Unfair Competition Law, California’s False Advertising Law, and the Consumer Legal Remedies Act.

The GreenSky Class Action Lawsuit is Belyea v. GreenSky of Georgia, LLC, et al., Case No. CGC20582136, in the Superior Court of the State of California in the County of San Francisco.