Attorney General Ellison sues solar lenders over $35M in deceptive hidden fees

Attorney General’s investigation uncovered four large solar-lending companies charged $35 million in hidden fees on nearly 5,000 loans that financed sales of residential solar panels

Lawsuit filed in Hennepin County against GoodLeap, Sunlight Financial, Solar Mosaic, and Dividend Solar Finance asserts violations of consumer-fraud statutes; seeks accurate representation and disclosures, civil penalties, and remediation to harmed purchasers

March 8, 2024 (SAINT PAUL) – Today, Minnesota Attorney General Keith Ellison announced he has sued four market-leading, solar-lending companies for deceiving consumers into taking out loans based on the companies’ false promises of low interest and disguised hidden fees on more than 5,000 solar-panel purchases in Minnesota. Most of the hidden fees increased the costs that borrowers incurred by between 15% and 30%, for a total of $35 million. The fees, which the lenders pocketed, often canceled out the benefit of credits designed to reduce the cost of and incentivize solar-panel purchases for Minnesota consumers. In the lawsuit, Attorney General Ellison alleges the lenders violated Minnesota state laws against deceptive trade practices, deceptive lending, and illegally high rates of interest.

“Investing in solar panels is one of the best things that Minnesotans can do to reduce their carbon footprint, save on energy bills, and do their part to reduce climate change,” stated Attorney General Ellison. “So I hate to see finance companies use schemes like this to exploit Minnesotans’ goodwill and public programs designed to incentivize solar purchases. The lenders I sued today seriously misled consumers by promising cheap credit for solar installation, only to charge huge upfront fees that consumers didn’t know about. Let this lawsuit serve as a warning that I will not tolerate deceptive practices, particularly in an industry that is so important to our collective future.”

The suit follows a six-month investigation into the lending practices of GoodLeap, Sunlight Financial, Solar Mosaic, and Dividend Solar Finance, which are market leaders in financing solar panel purchases. The investigation uncovered that the lenders all follow the same profit model, entering contractual relationships with Minnesota solar installers that direct the installers to push costly loans on unsuspecting consumers purchasing solar panels. Several of these companies have gone insolvent and bankrupt, including Utah-based Avolta Power, which was subject to an enforcement action by the Attorney General in 2022 that ended in the company ceasing operations in Minnesota. Through these arrangements with installers, the lenders tout very low interest rates, inducing consumers to finance purchases with their loans rather than pay with cash or obtain their own credit from local banks or credit unions.

Those low interest rates conceal the real cost of financing, as the lenders conceal large upfront fees from borrowers. The upfront fees are not included in sales proposals describing the system and its financing, they are not included in disclosures that lenders make when originating the loan, and the installers that lenders work with are not permitted to identify and explain the fees when marketing solar systems and offering payment options. Most borrowers never learn they are paying up to 54% more because they financed through the lenders rather than paying cash or obtaining a loan themselves for less.

The impact of the lenders’ practice in Minnesota is significant: Attorney General Ellison alleges they collected an estimated $35 million in hidden fees from Minnesota consumers since 2017, inflating the cost of over 5,000 systems at the expense of consumers who may never have taken out a loan from the lenders if they were informed of the true cost of financing. The practices also skewed sales towards the lenders’ financing, prevented comparison shopping, and gave the lenders and partner solar installers an inflated share of the market at the expense of businesses that do not use the hidden-fee model.

The Attorney General’s investigation, however, uncovered many Minnesota solar installers that rejected the deceptive sales model pushed by unscrupulous lenders. Many of those solar companies refer customers interested in financing to banks, credit unions, and other financial institutions that do not charge hidden fees and allow customers to pay for purchased systems over time.

“I want to make this clear: many businesses in the solar industry play by the rules and act honestly with consumers, and my investigation confirmed that,” added Attorney General Ellison. “I strongly encourage Minnesota homeowners looking to go solar to consider costs, research the companies you deal with, get competing bids, ask questions, and review documents before signing. If you finance, ask the lender and installer about any upfront fees that may be hidden in the price and loan balance before you sign.”

Protecting Solar Energy Customers

This lawsuit is the latest in a series of actions taken by Attorney General Ellison to protect solar energy consumers in Minnesota. Earlier this month, Attorney General Ellison won $85K in restitution for community solar garden customers that were charged unlawful early termination fees. On April 25, 2022, Attorney General Ellison filed a lawsuit against numerous Utah-based solar energy companies and the lenders they partnered with for deceptive and fraudulent practices in marketing and selling residential solar panel systems. The lawsuit alleged these companies falsely represented that their salespeople work for or in partnership with local utility companies and tricked consumers into signing binding sales contracts and loan agreements by disguising them as routine paperwork. A year later, Ellison secured a judgment against these companies, banning them from operating in Minnesota and winning $310K in restitution for Minnesota consumers.

The Minnesota Solar Energy Industry Association (MnSEIA) gave its 2022 Agency Excellence Recognition Award to the Minnesota Attorney General’s Office in recognition of the Office’s work in holding bad actors in the solar industry to account.

Consumers interested in learning more about their home solar-energy options should consult the Attorney General’s publication, “Residential Solar Systems” the Minnesota Department of Commerce webpage “Guidance for planning and installing your own solar energy system,” and the Better Business Bureau publication “A Consumer’s Guide to Going Solar,” which all offer tips to consumers who are considering solar.

Attorney General Ellison urges Minnesota consumers to report their concerns with solar companies or lenders by submitting a complaint online or by calling the Attorney General’s Office at (651) 296-3353 (Metro), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).