Sage Datko  |  August 11, 2020

Category: Legal News

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GreenSky financing mat be engaging in predatory lending.

Several lawsuits have been filed against GreenSky Financing by customers who claim that the company may be illegally operating as an unlicensed lender.

What Is GreenSky Financing?

GreenSky Financing is a company that partners consumers looking for home improvement loans with banks interested in lending them the money. The company offers a zero-interest period on many loans, and the application and approval processes are fast.

The company claims that rather than being a bank or a lender, they are a credit technology platform. Essentially, GreenSky describes itself as a middleman that connects customers and lenders.

However, some consumers who have used GreenSky Financing in order to secure funding for home improvement projects claim that the company may be more than just a middleman. According to several lawsuits filed against the company, GreenSky may also be operating as a lender without a license.

Who Uses GreenSky Financing?

Many people who use GreenSky are homeowners with a single home, or landlords with rental homes who are looking for funding for home improvement projects. The company allows borrowers to obtain loans of up to $65,000.

However, in order to use GreenSky, you need a high credit score. The average credit score of borrowers who go through the middleman have a credit rating of 768. Additionally, the company does not allow loan co-signers.

GreenSky financing home improvement loanHow Does GreenSky Financing Work?

GreenSky connects borrowers and lenders by partnering with home improvement contractors and other workers. As an affiliate of these workers, GreenSky is able to offer their customers unsecured loans with a quick approval process. The company collects a percentage of the loan from both the contractor receiving the payment and the financial institution offering the loan.

GreenSky may be a good option for consumers with high credit ratings who need a home improvement loan that they can pay off quickly. Many GreenSky financial loans come with a period of time where the borrower is not required to pay interest, as long as they pay the loan off in full within that time period.

Due to this period of deferred interest, GreenSky may be very appealing to borrowers who can pay back the money quickly. However, borrowers who fail to pay off their loan within the zero interest period may be responsible for all the interest accumulated on the loan.

Has GreenSky Used Deceptive Business Practices?

According to some borrowers, GreenSky may be engaging in deceptive business practices by charging excessive fees and acting as an unlicensed lender.

Although the company claims to simply be a middleman, some borrowers claim that they made payments directly to GreenSky, rather than to the institutions actually holding their loans. Other borrowers claim that the company has violated lender laws by charging excessive fees.

Plaintiff Elizabeth Belyea filed a lawsuit against the company after she claims that GreenSky collected an illegal financing fee on a consumer loan. In 2019 a rental property that she owned began to experience problems with the plumbing. In order to pay for part of the costs of the work, she says she took out a loan through GreenSky, an affiliate of her contractor. Belyea claims that her contractor chose the financing plan for her and told her that if she paid it back within eighteen months, she would not be charged interest.

However, despite her nearly perfect credit score of 835, Belyea claims she was shocked to discover that the loan she had obtained came with an APR of more than 25%. If she took the seven-year life of the loan to pay off the debt, she would end up paying more than $77,000 on a $23,600 loan.

Due to her alarm over the high interest rate, Belyea withdrew money from her retirement account to pay off the loan before she was assessed interest. However, she claims that GreenSky added a merchant fee to the cost of her loan. According to Belyea, the fees charged by GreenSky are in excess of the legal amount that California Financing Law allows them to collect.

Another plaintiff from Missouri has also accused the company of charging fees that are above the limit that the state sets for merchant fees on loans.

Should You Join a GreenSky Class Action Lawsuit?

If you held a loan through GreenSky prior to 2017 in California, Florida, Missouri, or another state, you may be eligible to join a GreenSky class action lawsuit. If you believe you have been charged excessive and illegal fees by the company, you may be able to talk with an experienced attorney about your legal options.

Join a Free GreenSky Credit Class Action Lawsuit Investigation

If you used GreenSky to finance a home improvement project in Northern California—especially in the Bay Area, including Contra Costa, Alameda, and San Mateo counties—you may qualify to join this FREE GreenSky lawsuit investigation.

Get a Free Case Evaluation

This article is not legal advice. It is presented
for informational purposes only.

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