FTC Mailing 72,386 Checks Totaling $2.9 Million to People Who Lost Money in Alleged Payday Loan Scheme
On February 15, 2018, the Federal Trade Commission announced that it is mailing 72,836 checks totaling more than $2.9 million to people who lost money to an alleged scheme that trapped them into payday loans they never authorized or whose terms were deceptive.
According to the FTC, CWB Services, LLC and related defendants used consumer information from online lead generators and data brokers to create fake payday loan agreements. After depositing money into people’s accounts without their permission, they withdrew recurring “finance” charges every two weeks without applying any of the payments to the supposed loan. In some instances, consumers applied for payday loans, but the defendants charged them more than they said they would. Under settlements with the FTC, the defendants are banned from the consumer lending business.
According to the FTC, the average refund amount is $40.61, and check recipients should deposit or cash checks within 60 days. Importantly, the FTC never requires people to pay money or provide account information to cash a refund check. If recipients have questions about the case, they should contact the FTC’s refund administrator, Epiq Systems, Inc., 888-521-5208.
Related News: FTC Announces Action Stopping Payday Loan Fraud Scheme
In July 2015, the FTC announced that the operators of a payday lending scheme that allegedly bilked millions of dollars from consumers by trapping them into loans they never authorized will be banned from the consumer lending business under settlements with the FTC.
The FTC identified the defendants as Coppinger and his companies, CWB Services LLC, Orion Services LLC, Sandpoint Capital LLC, Sandpoint LLC, Basseterre Capital LLC, Basseterre Capital LLC, Namakan Capital LLC, and Namakan Capital LLC, and Rowland and his companies, Anasazi ervices LLC, Anasazi Group LLC, Vandelier Group LLC, St. Armands Group LLC,; Longboat Group LLC, doing business as Cutter Group, and Oread Group LLC, d/b/a Mass Street Group.
The FTC settlement orders impose consumer redress judgments of approximately $32 million and $22 million against, respectively, Coppinger and his companies and Rowland and his companies. The judgments against Coppinger and Rowland will be suspended upon surrender of certain assets, and in each case, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.
The settlements stem from charges the FTC filed alleging that Timothy A. Coppinger, Frampton T. Rowland III, and their companies targeted online payday loan applicants and, using information from lead generators and data brokers, deposited money into those applicants’ bank accounts without their permission. The defendants then withdrew reoccurring “finance” charges without any of the payments going to pay down the principal owed. The court subsequently halted the operation and froze the defendants’ assets pending litigation.
Under the proposed settlement orders, the defendants are banned from any aspect of the consumer lending business, including collecting payments, communicating about loans, and selling debt, as well as permanently prohibited from making material misrepresentations about any good or service and from debiting or billing consumers or making electronic fund transfers without their consent.
The orders extinguish any consumer debt the defendants are owed; bar the defendants from reporting such debts to any credit reporting agency; and prevent the defendants from selling, or otherwise benefiting, from customers’ personal information.
According to the FTC’s complaint, the defendants told consumers they had agreed to, and were obligated to pay for, the unauthorized “loans.” To support their claims, the defendants provided consumers with fake loan applications or other loan documents purportedly showing that consumers had authorized the loans. If consumers closed their bank accounts to stop the unauthorized debits, the defendants often sold the “loans” to debt buyers who then harassed consumers for payment.
The defendants also allegedly misrepresented the loans’ costs, even to consumers who wanted the loans. The loan documents misstated the loan’s finance charge, annual percentage rate, payment schedule, and total number of payments, while burying the loans’ true costs in fine print.