Data brokers sold payday loan applicants information to scammers: FTC


WASHINGTON – A data broker operation sold the financial information of payday loan applicants to crooks, who cashed in millions of dollars by debiting bank accounts and debiting credit cards without authorization, the Federal accused Wednesday Trade Commission.

Data brokers bought “hundreds of thousands of consumer payday loan applications” and instead of passing them on to legitimate payday lenders, sold them to non-lending third parties, the FTC accused in a complaint. Among the companies was Ideal Financial Solutions Inc., which bought 500,000 apps and raided accounts for at least $ 7.1 million, the FTC said.

“These non-lending third parties included bogus Internet merchants, such as Ideal Financial, who used sensitive consumer information to commit fraud by debiting consumers’ bank accounts with purported financial products that consumers had never purchased,” says the complaint.

FTC seeks permanent injunction against defendants – Sequoia One of Wyoming, Gen X Marketing of Florida and corporate associates Jason A. Kotzker, Theresa D. Bartholomew, John E. Bartholomew Jr. and Paul T. McDonnell – and the return of ill-gotten gains.

In a statement, Jessica Rich, director of the FTC’s Office of Consumer Protection, said data brokers who act unethically are as culpable as the crooks themselves.

“Companies that collect sensitive information about people and pass it on to crooks can expect to hear from the FTC,” she said.

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McDonnell and the Bartholomews have agreed to settle, the commission said, under an order that prohibits them from selling or otherwise benefiting from customers’ personal information. The order’s $ 7.1 million judgment against the Bartholomews will be suspended on payment of $ 15,000, he said.

The FTC documents have been filed with the U.S. District Court in Nevada and the final orders are pending court approval.

Payday loans are small extensions of credit that borrowers agree to pay off in a short period of time, such as on their next paycheck. Lenders who offer the products say they help those strapped for cash, but consumer advocates say borrowers often end up in high debt due to interest rates, fees and loan renewals students.

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