[Update November 19, 2020 – I heard from GreenPath and they confirmed they do not engage in debt settlement or credit repair as the second suit alleges. I fully expect that suit to be dismissed quickly. The two suits against GreenPath are unfortunate news, not necessarily because of the technical issues that can be resolved easily but because nonprofit counseling agencies are under attack from many sides and it must be exhausting having to deal with this stuff. I fully expect to be able to provide a further update soon when the cases are terminated.]
The nonprofit debt management company GreenPath has been recently the subject of two lawsuits. Oddly they come days apart.
Hopefully, these cases can serve as learning opportunities for other debt management groups out there if there are any lessons to be learned.
The first suit is a class action complaint out of Georgia.
The allegation is GreenPath violated the Georgia Debt Adjustment Act and the Georgia Fair Business Practices Act.
The complaint states, “This is a proposed class action brought on behalf of all Georgia residents who have done business with Defendant since July 1, 2003 to the present wherein Defendant engaged in debt adjusting as defined by Georgia’s Debt Adjustment Act, OCGA §§ 18-5-1 et seq., (hereinafter the “Act” or “GDAA”) for said Georgia residents.”
According to the complaint, the issues surround Debt Management Plan fees and amounts retained by GreenPath.
The complaint seeks to obtain clarity if the DMP service offered by GreenPath in Georgia is subject to Georgia laws regulating debt adjustment.
The allegation made is the GreenPath accepted more than 7.5% of the amount they distributed monthly to creditors of the client(s).
The suit can be seen below.
The second suit is a suit out of Michigan.
This one is a bit more perplexing. This suit claims GreenPath violated the Credit Repair Organizations Act and the Minnesota Credit Services Organization Act. The lawsuit wants to claim GreenPath is a debt settlement provider.
The Plaintiff in this case is a Minnesota resident.
Here is the interesting part. The suit states, “Defendant is a credit repair organization that describes its “mission” as “to empower people to lead financially healthy lives.” Defendant states that “[e]very year, hundreds of thousands of people improve their financial health by working with us.”
The suit below certainly reads as if GreenPath was engaged in settlement services.
The complaint says, “In approximately October 2019, Plaintiff entered into a contract with Defendant for the provision of credit repair services.
The purpose of Defendant’s services provided to Plaintiff were for Defendant to go about attempting to improve Plaintiff’s credit by seeking to reach settlements with Plaintiff’s various creditors.
In connection therewith, Plaintiff provided a list of outstanding accounts that would be addressed through Defendant’s credit repair services.
Plaintiff was required to make certain monthly payments to Defendant, the funds from which would go towards Defendant’s efforts to address the debts included within the program Defendant provided to Plaintiff.
Included within the debts in the program Defendant provided to Plaintiff was a Capital One debt with an account number ending in 4949 (“subject account”).
Plaintiff was making monthly payments to Defendant to go about addressing the subject account.
Defendant accepted Plaintiff’s payments in connection with the subject account, and represented to Plaintiff that a portion of his monthly payments were going towards addressing the subject account.
However, contrary to Defendant’s representations, the payments he was making were not being applied to the subject account as represented by Defendant.
As a result of Defendant’s misrepresentations as to the services it was providing in connection with the subject account, Plaintiff was subsequently sued by the owner of the subject account, despite Plaintiff’s belief that Defendant was actively paying down the subject account.
As a direct result of Defendant’s acts and omissions, Plaintiff has suffered concrete harm in the form of emotional distress and anxiety for being sued in connection with a debt Defendant represented it was making payments on.”
It would be a bit of a game-changer for GreenPath to be identified as a settlement company rather than a debt management company.
I’ll track these cases for updates and resolutions.
It sure seems like October for GreenPath was another lousy moment in the otherwise horrible 2020 we’ve all been dealing with.