The Consumer Financial Protection Bureau (CFPB) released an issue spotlight and a consumer advisory about “predatory” lending related to solar panel installations and said it will work with other government agencies to crack down on these abuses.
The regulator found that some residential solar lenders are misleading homeowners about the terms and costs of their loans, misrepresenting the energy savings the solar panels will deliver, misrepresenting the value of the federal tax credit for solar installation, and adding hidden markup fees to borrowers’ loan balances, according to a Wednesday (Aug. 7) press release.
These lenders often partner with solar installers and door-to-door sales companies, according to the release.
“With sweltering heat across America this summer, many families are installing solar panels to save on energy costs to cool their home,” CFPB Director Rohit Chopra said in the release. “The CFPB is closely scrutinizing solar lenders to make sure that Americans don’t get burned.”
One of the risky practices the agency discovered is hidden markup fees, according to the release. Some solar lenders mark up the principals of the loans to include hidden fees, don’t include those fees in the stated annual percentage rate (APR) and don’t clearly separate the fees from the total cash price that consumers would otherwise pay.
The CFPB also found that some lenders present consumers with a price that assumes the federal tax credit will be received, even though that is not guaranteed; charge homeowners a prepayment or higher monthly payments if the tax credit is not received; and claim the savings from solar panels will cover financing costs and future energy bills, even though the financial benefits of the projects are uncertain, the release said.
The CFPB said in the release that it will work with the Department of the Treasury, the Federal Trade Commission and other government partners “to crack down on abuses in this important market.”
In other actions taken over the last few weeks, the CFPB joined other federal financial regulatory agencies in proposing joint data standards, closed the commentary period on its proposed buy now, pay later rule, and warned that some payment processing companies that help school districts process students’ school lunch payments may be violating federal consumer protection laws.
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