Court order shuts down payday loan scam
The FTC says a business that claimed to expedite loans actually used information provided online to raid thousands of victims' bank accounts, to the tune of $5 million.
That's what the Federal Trade Commission said allegedly happened, and cost "tens of thousands" of consumers some $5 million. The federal agency announced Wednesday that it received a court order to stop the business and freeze its assets.
"Repeatedly, we’ve seen situations where consumers provide sensitive financial information when inquiring about a payday loan online, and that information falls into the wrong hands," said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. "The FTC is committed to shutting down these fraudulent operations."
The company operated under the following names: Vantage Funding, Ideal Advance, Loan Assistance Company, Palm Loan Advances, Loan Tree Advances, Pacific Advances and Your Loan Funding.
The FTC said the businesses were operated by Sean C. Mulrooney and Odafe Stephen Ogaga, who the agency said lived large off the proceeds of the scam. Mulrooney owns a Maserati and Ogaga owns both a Rolls Royce and a Ferrari 430, the FTC said.
In addition to using bank account information collected as part of the supposed payday loan application to debit victims' accounts, the FTC said the companies also paid third parties to get additional financial information and debited those consumers' accounts, too.
To draw in customers, the companies claimed they were associated with 120 payday lenders and claimed 80% of those who applied for the loans could get them in as soon as one hour, the FTC said. For those who decided to complain, customer service representatives in the Philippines often made empty promises of refunds and a $100 gas card to make up for the trouble.
An organization of online lenders commended the FTC for policing their industry.
"We applaud FTC’s actions today against these scammers who deceived consumers by using their personal information to debit their bank accounts without authorization. We are outraged as an industry that these companies would take advantage of consumers who are in need of credit," said Lisa McGreevy, President and CEO of the Online Lenders Alliance. "Scammers who pose as legitimate lenders or loan marketers solely to defraud consumers should be prosecuted vigorously and punished severely."
The FTC offers advice about taking out online payday loans, with the chief tip being to be sure to have tried all the alternatives to avoid going down a road of getting a very high-priced loan.
More from MSN Money:
- Tooth fairy more generous this year, survey says
- How to shop for an Obamacare policy
- Reefer madness: Pot company scams on the way
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Banks often use sign-up bonuses as a way to get new customers to apply for one of their cards. But are you guaranteed to earn the bonus?
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'