A trio of federal agencies have issued consumer advisories warning of
The warnings from the Consumer Financial Protection Bureau, Department of the Treasury and the Federal Trade Commission came one week after a Center for Responsible Lending paper comparing practices at certain lenders to those of subprime mortgage companies in the mid-2000s, calling them predatory.
In addition to the advisories, the three agencies, along with the Department of Housing and Urban Development and the Department of Energy, are forming an interagency task force to coordinate efforts to combat those predatory practices.
The effort validates the arguments the CRL made in its paper, said Anneliese Lederer, co-author and senior policy counsel.
"I hope that it results in enforcement actions at the federal level," Lederer said. "What has happened so far is only the state [attorneys general] have acted against these bad actors, and the federal government has stayed out."
While some states — Lederer pointed to Minnesota, Tennessee and Kentucky — have taken enforcement actions against allegedly predatory solar lenders, others do not have as strong a consumer protection regime.
Now the federal government should be able to step in and protect consumers nationwide, Lederer said.
While many of these loans have been put into asset-backed securitizations, some also have a partial guarantee from the DOE. Some borrowers
Over the past decade, regulators have received an increasing number of consumer complaints, the Treasury Department press release said.
"The FTC will keep working with enforcement partners across government to ensure that Americans can unlock the benefits of solar energy without getting ripped off or scammed," said Lina Khan, its chair.
A check of the CFPB consumer complaint database using the term "solar" found 702 entries since August 2021. Besides the CFPB, consumers can also contact the FTC.
"With sweltering heat across America this summer, many families are installing solar panels to save on energy costs to cool their home," said CFPB Director Rohit Chopra in the Treasury press release. "The CFPB will be scrutinizing solar lenders to make sure that Americans don't get burned."
In the CFPB's separate press release, it noted last year 58% of solar projects used loans to finance the installation. As a result, the number of lenders for this purpose has also increased.
"These lenders often partner with solar installers and employ a variety of marketing and door-to-door sales tactics to convince homeowners to enter into financing agreements," CFPB said, echoing the arguments made in the CRL report.
The Americans for Financial Reform called the joint effort a starting point when it comes to curbing bad actors and practices.
"Interagency collaboration to educate the public is a helpful first step," said Christine Zinner, senior policy counsel for consumer protection at the Americans for Financial Reform Education Fund. "We look forward to robust regulatory and enforcement measures to complement these efforts, maximizing the safety and soundness of these green lending products to protect households, particularly the elderly or those with limited language access, from predatory or fraudulent green loans."
The CRL in its report estimated that 70% of these installations used financing. A 2023 LendingTree survey, however, found
"While skyrocketing growth of the residential solar industry is lowering costs for consumers nationwide, a small number of bad actors are taking advantage of opportunities to scam customers," said Deputy Secretary of the Treasury Wally Adeyemo. "By providing new information to consumers interested in solar energy for their homes and coordinating across federal agencies to prevent scams, the Biden-Harris Administration is helping to ensure consumers who want to lower their utility bills are able to successfully do so."
The breadth of the agencies working together is also unusual, with Lederer pointing to one notable example of such coordination in the past with the
"We're just excited that they're taking consumers' complaints seriously and that they are working to help all Americans, as well as the climate," Lederer said.
National Mortgage News reached out to the Solar Energy Industries Association for a comment.
