You did your research. You chose a local solar installer with a legitimate license and access to financing from a big, reputable lender like Goodleap or Mosaic. You avoided the obvious red flags. Yet a year later, your system is underperforming, your roof is leaking, and the installer’s phone number is disconnected. A quick search reveals the devastating news: they have filed for bankruptcy.
How could this happen? You may be the victim of a sophisticated “shell game” scam, where predatory operators buy small, established solar companies specifically to exploit their reputation and financing partnerships, defraud homeowners, and then disappear.
This is a tactic designed to leave you feeling stranded and powerless. But what most homeowners and even many lawyers don’t know is that your fight might not be over. In many cases, the responsibility can shift to the finance company that is still collecting your monthly payments. This guide explains how.
The Barrier to Entry: Why Good Financing is a Target
To understand the scam, you first need to understand the industry. Top-tier solar finance companies don’t partner with just anyone. They require installers to have a long, proven track record of quality work and happy customers to get access to their easy-to-use, low-interest loan products. This vetting process protects the lender, but it’s a barrier for new, dishonest companies who want to make a quick buck. So, instead of building a reputation, they buy one.
The “Shell Game” Scam Explained: A Step-by-Step Breakdown
This is a deliberate, multi-step strategy designed to maximize profit before vanishing.
- The Acquisition: A predatory operator finds and buys a small, legitimate solar installation company that has been in business for years and, most importantly, is already approved to offer financing from major lenders.
- The Promises: Operating under this trusted, local name, the new owners launch an aggressive sales campaign. They can promise anything—unrealistic savings, massive warranties, free upgrades—because they have no intention of being around to honor those promises. They can easily out-promise the competition, making their offer rise above all the rest.
- The Fraud: They perform fast, shoddy installations using the easy financing they now have access to. They may overcharge for the system, install cheaper equipment than what was promised, or use deceptive practices like system undersizing to make the deal look better than it is.
- The Disappearance: The new owners operate like this for 12-18 months—often just long enough for system performance issues and installation defects to begin surfacing. Once enough complaints start rolling into the finance company, threatening their partnership, the operators have already made their profit. They file for bankruptcy, dissolve the company, and walk away, leaving homeowners stranded. They then move on to another state or another small company and repeat the process.
The Hidden Leverage: The FTC’s “Holder Rule”
When you’re left with a faulty system and a worthless workmanship warranty, it can feel hopeless. You still have a loan to pay, but the company responsible for the work is gone. However, there is a powerful federal law designed for this exact situation: The FTC’s Holder Rule.
In simple terms, the Holder Rule states that the ultimate holder of the consumer credit contract (your finance company) is subject to all the same legal claims and defenses that you could have asserted against the original seller (the solar installer).
This means the finance company cannot simply wash their hands of the situation and say “that’s not our problem.” If the installer they chose to partner with committed fraud, sold you a faulty system, or breached your contract, you may have the right to assert those claims against the finance company as a reason to stop paying your loan.
Your Next Step: Building a Case Against the Right Party
Navigating a dispute after an installer goes bankrupt requires a specialized strategy focused on lender liability under the Holder Rule. This is a complex legal argument that requires meticulous documentation.
Our role at SolarDispute.com is to perform the deep-dive analysis of your original contract and the promises made during the sale. We build the evidence file needed to demonstrate the seller’s misconduct, which is the foundation for making a claim against the lender. We then connect you with an expert attorney who knows how to leverage this powerful but often overlooked federal law to protect your rights.