FTC ANNOUNCES PAYDAY LENDER OPERATORS INVOLVED IN ALLEGED FRAUD TO BE BANNED FROM CONSUMER LENDING BUSINESS

FROM:  U.S. FEDERAL TRADE COMMISSION
FTC Action Stops Massive Payday Loan Fraud Scheme Defendants Agree to be Banned from Consumer Lending

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 Federal Trade Commission.

The settlements stem from charges the FTC filed last year 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.

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. The defendants allegedly violated the FTC Act, the Truth in Lending Act, and the Electronic Funds Transfer Act.

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. They are also 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, and bar them from reporting such debts to any credit reporting agency, and from selling or otherwise benefiting from customers’ personal information.

The defendants are 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 settlement orders impose consumer redress judgments of approximately $32 million and $22 million against Coppinger and his companies and Rowland and his companies, respectively. The judgments against Coppinger and Rowland will be suspended upon surrender of certain assets. In each case, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote approving the proposed stipulated final orders was 5-0. The documents were filed in the U.S. District Court for the Western District of Missouri. The proposed orders are subject to court approval.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

PAYDAY LOAN BROKER SCHEMERS SETTLE FTC CHARGES

FROM:  U.S. FEDERAL TRADE COMMISSION 

Phony Payday Loan Brokers Settle FTC Charges

Defendants Will Be Banned From Credit-Related Businesses and Surrender Rolls Royce, Ferrari, and Other Assets

The operators of a Tampa, Florida-based payday loan broker scheme have agreed to settle Federal Trade Commission charges that they falsely promised to help consumers get loans, but instead used consumers’ personal financial data to take money from their bank accounts without their consent.

Claiming to be affiliated with a network of 120 potential payday lenders, defendants Sean C. Mulrooney and Odafe Stephen Ogaga, and five companies they controlled, misrepresented that 80 percent of all applicants got loans within an hour, according to the FTC’s complaint. In reality, the defendants did not lend money to consumers, and there is no evidence that they helped anyone in obtaining a loan.

According to the complaint, the defendants used consumers’ personal financial information it had collected through its websites to withdraw $30 from the bank accounts of tens of thousands of consumers, without authorization and without providing anything of value in return.

“These defendants deceived consumers to get their sensitive financial data and used it to take their money,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue putting a stop to these kinds of illegal practices.”

The proposed settlement bans the defendants from:

marketing or providing any credit-related products or services, including loans, prepaid credit cards, debt-relief services, and credit repair services;
collecting, selling, or buying consumers’ personal and financial information, except in order to process a specifically authorized transaction; and
processing transactions using remotely created checks or remotely created payment orders.
The settlement imposes a $6.2 million judgment, which is equal to the defendants’ ill-gotten gains. The settlement requires Ogaga to surrender nearly all his assets: $50,000 in cash, and proceeds from the sale of his 2011 Rolls Royce Ghost, 2007 Lexus LS460, and 2006 Ferrari. Once he surrenders these assets, the remainder of the judgment against Ogaga will be suspended. The judgment against Mulrooney is entirely suspended, due to his inability to pay.

Also under the settlement, the defendants are prohibited from misrepresenting the terms and conditions of any service or product they market, and from charging consumers for anything without their consent. The settlement also requires the defendants to dispose of customer information that they have already collected and not to use, disclose, or benefit from, and it.

For more consumer information on this topic, see Online Payday Loans.

In addition to Mulrooney and Ogaga, the complaint named Caprice Marketing LLC; NuVue Partners LLC; Capital Advance LLC; Loan Assistance Company LLC; and ILife Funding, LLC, formerly known as Guaranteed Funding Partners LLC.

The Commission vote approving the proposed stipulated final order was 5-0. The FTC filed the order in the U.S. District Court for the Northern District of Illinois, and the court entered it on July 1, 2014.