Hidden Solar Dealer Fees & TILA: MDL 3128 [Court Ruling]
A federal judge held that hidden solar platform fees are finance charges under the Truth in Lending Act. What MDL 3128 means for homeowners with inflated loans.
Disclaimer This article is factual consumer education and legal-news analysis, not legal advice. A ruling on a motion to dismiss decides what claims may proceed; it is not a finding of liability. Consult a licensed consumer-protection attorney about your own loan.
Answer First
On August 22, 2025, U.S. District Judge Katherine M. Menendez allowed Truth in Lending Act and common-law fraud claims to proceed in MDL No. 3128, holding that the undisclosed "platform fees" solar lenders bury inside loan principals can constitute finance charges that TILA requires be disclosed. RICO claims were dismissed.
The practical significance for homeowners is narrow but real: the gap between what your solar system cost and what your loan principal says is no longer just a pricing grievance. It is a potential federal disclosure violation — a claim with its own statutory remedies, its own limitations period, and its own leverage.
Key Points
- The case In re Dividend Solar Finance, LLC, and Fifth Third Bank Sales and Lending Practices Litigation, MDL No. 3128, District of Minnesota, before Judge Katherine M. Menendez. Consolidated by the Judicial Panel on Multidistrict Litigation on October 3, 2024.
- The mechanic at issue a "platform fee" or "dealer fee" added to the financed principal without separate disclosure, so the borrower signs a note for far more than the system's cash price.
- The example in the record a loan with an actual principal of $44,360 disclosed to the borrower as $70,661 — a hidden fee of $26,301.
- What survived TILA claims over undisclosed platform fees, and common-law fraud claims based on affirmative misrepresentations about where the loan proceeds went. RICO claims were dismissed.
- What it is not a judgment, a settlement, or a fund. Discovery proceeds. No homeowner has been paid because of this order.
The Fee Mechanic in Plain Terms
Solar is sold almost entirely on monthly payment, not on price. That creates room for a specific structure.
A homeowner is quoted a system at, say, $44,000 with an advertised interest rate of 1.99%. The rate is genuine. What is not disclosed is that the lender charges the installer a fee — commonly 15% to 30% of the loan — for originating financing at that below-market rate. The installer does not absorb that fee. It is added into the amount financed. The homeowner signs a note for $70,000 on a $44,000 system, sees a low APR on the disclosure, and never learns that roughly $26,000 of principal is the price of the low rate.
Because the fee is folded into principal rather than itemized, it appears on the TILA disclosure as amount financed, not as a finance charge. That single classification decision is the whole dispute.
Minnesota's Attorney General put numbers on the practice in a March 2024 enforcement action against four lenders, alleging fees of 15% to 30% across more than 5,000 Minnesota loans totaling roughly $35 million in undisclosed markups, and pegging GoodLeap's average fee at 19.32% of each loan — $7,552.19 on average. Our comparison of the four defendants is at GoodLeap vs Sunlight vs Mosaic vs Dividend.
Why the TILA Holding Matters
The Truth in Lending Act, 15 U.S.C. § 1601 and its implementing Regulation Z, exist for one stated purpose: so consumers can compare the cost of credit and, as Judge Menendez framed it, avoid the uninformed use of credit. A finance charge under TILA is the cost of credit as a dollar amount — and it must be disclosed as such.
The lenders' position has been that a dealer or platform fee is a business-to-business charge between lender and installer, part of the system's price, not the borrower's cost of credit. If that were right, folding it into principal would be a pricing choice and nothing more.
The August 2025 ruling declined to accept that framing at the pleadings stage. If a fee exists because the borrower is financing rather than paying cash — if the cash buyer would not pay it — then treating it as part of the amount financed rather than as a finance charge understates the disclosed cost of credit. That is the claim the court allowed to proceed.
What Changed Practically
| Before the ruling | After the ruling |
|---|---|
| Fee gap framed as an unfair-pricing complaint | Fee gap framed as a federal disclosure claim |
| Remedy theories limited to state UDAP and scams | TILA statutory remedies added to the stack |
| Lenders could characterize the fee as B2B | Characterization is now a contested fact question |
| Homeowner leverage rested on installer conduct | Leverage attaches directly to the lender |
That last row is the important one. The Holder Rule lets a homeowner assert the installer's misconduct against the loan holder — see the FTC Holder Rule and solar lender liability. A TILA disclosure claim is different in kind: it is the lender's own alleged violation, and it does not depend on proving the salesperson lied.
What Was Dismissed, and Why That Matters Too
The court dismissed the RICO claims. Civil RICO requires a pattern of racketeering activity through an enterprise, and it carries treble damages — which is exactly why plaintiffs plead it and why courts scrutinize it hard in commercial-lending cases. Its dismissal here is unsurprising and does not undercut the surviving claims.
Read honestly, the order is a mixed result that plaintiffs won the important half of. Anyone describing it as a homeowner victory in the sense of money changing hands is overstating it.
How to Check Your Own Loan for the Same Defect
Loan audit methodology transfers directly to an individual homeowner, whether or not any lawsuit ever reaches you.
Step 1: Find the cash price you were actually quoted
Look for the original proposal, the signed sales agreement, the design document, or any text or email stating a system price. Screenshots of a tablet presentation count. What you want is a number that predates the loan documents.
Step 2: Find the amount financed
Page one of the loan note, or the TILA disclosure box. The fields are labeled: Amount Financed, Finance Charge, Annual Percentage Rate, Total of Payments.
Step 3: Subtract
If the amount financed exceeds the quoted cash price and there is no signed change order explaining the difference — no added battery, no roof work, no panel upgrade — that difference is the fee. Express it as a percentage of the loan. Anything in the 15% to 30% band matches the pattern regulators have described.
Step 4: Ask the lender, in writing, to itemize it
Send a written request for an itemization of the amount financed, including any dealer, platform, or origination fee paid to the installer. Send it certified with return receipt. The response — or the refusal to respond — becomes evidence either way.
Step 5: Preserve the timeline
TILA claims carry limitations periods that vary by the remedy sought, and they generally run from the transaction or the disclosure violation rather than from when you discovered it. Delay is the most common way a viable disclosure claim dies. Document when you first learned of the fee.
Step 6: File the regulatory record
Submit to the CFPB at consumerfinance.gov/complaint and to your state Attorney General's consumer protection division. See documents to send with a solar complaint.
What This Ruling Does Not Do
Being precise here matters more than being encouraging.
- It does not cancel anyone's loan. It permits claims to be litigated.
- It does not create a fund to file into. There is no claims administrator and no settlement website for MDL 3128 as of this writing. Treat any site soliciting fees to "file your claim" with suspicion — see solar debt relief scams.
- It does not bind other courts. A district court order on a motion to dismiss is persuasive, not controlling, elsewhere.
- It does not reach lenders who are not parties. GoodLeap, Sunlight Financial, and Mosaic are not defendants in MDL 3128. The reasoning may travel; the order does not.
- It does not override your arbitration clause. Most solar loan notes compel individual arbitration and waive class participation. See solar arbitration and how to challenge it.
That last point is the one homeowners most often miss. Reading about a federal MDL and concluding you are in it is a category error. If your note has an arbitration clause and a class waiver, your realistic forum is individual arbitration — where this ruling functions as persuasive authority you bring with you, not as a case you join.
Where This Fits in the Broader Enforcement Picture
The dealer-fee theory is now being pressed on three fronts at once:
- State enforcement — Minnesota's action against GoodLeap, Sunlight, Mosaic, and Dividend, filed March 2024.
- Federal aggregate litigation — MDL 3128 against Dividend and Fifth Third Bank, consolidated October 2024, motion to dismiss largely denied August 2025.
- Individual arbitrations — where the same fee evidence supports scams, UDAP, and failure-of-consideration claims, and where most homeowners actually end up.
Meanwhile the corporate landscape shifted underneath all three. Solar Mosaic filed Chapter 11 in the Southern District of Texas on June 6, 2025 and confirmed a plan of liquidation on September 5, 2025, with servicing of more than $8 billion in loans moving to Solar Servicing LLC, a Forbright Bank subsidiary. Sunlight Financial restructured in Delaware in late 2023. Neither event erased borrower obligations, and neither erased borrower defenses. See what solar loan settlements actually recover.
FAQ
Is a solar dealer fee illegal?
Charging a fee is not itself illegal. The claims in MDL 3128 and the Minnesota enforcement action concern non-disclosure — folding the fee into principal so it appears as amount financed rather than as a cost of credit, and in some allegations contractually barring installers from telling customers the fee exists.
Does the MDL 3128 ruling mean I can sue my solar lender?
The MDL 3128 decision confirms that TILA claims of this type survived a motion to dismiss against two specific defendants. Whether you have a viable claim depends on your lender, your documents, your state, your arbitration clause, and applicable limitations periods. The ruling improves the argument; it does not supply the claim.
How do I know if my solar loan has a hidden dealer fee?
Compare the cash price on your original quote to the amount financed on page one of your loan note. An unexplained increase with no signed change order is the fee. In the cohort regulators have described, it typically runs 15% to 30% of the loan.
Which lenders are defendants in MDL 3128?
Dividend Solar Finance, LLC and Fifth Third Bank. GoodLeap, Sunlight Financial, and Solar Mosaic are named in the Minnesota Attorney General's separate state action, not in this MDL.
Can I join MDL 3128?
MDL 3128 consolidates federal cases for pretrial proceedings; it is not an open claims fund. Most solar loan notes contain individual arbitration clauses and class waivers that route borrowers out of class litigation entirely. Ask a consumer-protection attorney what your specific contract permits.
What is the difference between a dealer fee and an origination fee?
An origination fee is normally disclosed to the borrower as a cost of the loan. A dealer or platform fee is paid by the lender's arrangement with the installer and, in the disputed loans, was added into principal without separate disclosure to the borrower. The dispute is over whether that difference in labeling is lawful under TILA.
Does a hidden dealer fee let me stop paying my solar loan?
No. Unilateral non-payment produces delinquencies and collection activity regardless of the merits. Dispute in writing first, assert Holder Rule and disclosure claims formally, and get advice before changing your payment behavior. See chargebacks, ACH disputes, and the Holder Rule.
Related Resources
- What outcomes actually look like: solar loan settlements and what homeowners recover.
- All the paths compared: 6 ways to fight a solar loan.
- The four Minnesota defendants: GoodLeap vs Sunlight vs Mosaic vs Dividend.
- The lender-liability backbone: the FTC Holder Rule and solar loans.
- How markups get built into a deal: how solar companies rip you off.
Sources
- U.S. Judicial Panel on Multidistrict Litigation, In re Dividend Solar Finance, LLC, and Fifth Third Bank Sales and Lending Practices Litigation, MDL No. 3128 — Transfer Order (October 3, 2024).
- U.S. District Court for the District of Minnesota, MDL No. 3128 case page.
- Silver Golub & Teitell LLP, Federal Court Allows Solar Lending MDL to Move Forward Against Dividend Solar Finance and Fifth Third Bank (August 22, 2025).
- Minnesota Attorney General Keith Ellison, Attorney General Ellison sues solar lenders over $35M in deceptive hidden fees (March 8, 2024).
- Consumer Financial Protection Bureau, Truth in Lending Act (Regulation Z) — finance charge.
- Federal Trade Commission, Preservation of Consumers' Claims and Defenses (Holder Rule), 16 C.F.R. Part 433.
- Solar Power World, Solar finance platform Mosaic files for bankruptcy (June 2025).
Is your loan principal bigger than the system you were quoted?
Discrepancies between cash estimates and financed principal are documentable, and represent the exact fact pattern regulators and a federal court are actively examining. Our eligibility form organizes your quote, loan disclosure, and change orders for review and may route qualifying matters toward a consumer-protection attorney. We are a marketing company, not a law firm, and submitting the form does not create an attorney-client relationship.
Next Research Steps
Use these resources to connect this issue with the broader solar scam pattern, the relevant legal framework, and the next practical action.
Solar panel scams
Start with the main solar panel scams guide for the broad definition and recovery roadmap.
Solar financing fraud compensation
Use this guide for loan, dealer-fee, payment-jump, PACE, lease, and lender-defense issues.
Homeowner legal rights
Review cancellation, rescission, UDAP, TILA, Holder Rule, arbitration, and lawsuit options.
Misled by a solar company?
Free 24-hr review · Statutory fee-shifting