There are no shortage of shady folks out there who are always ready to pull off a financial scam that harms honest, hardworking people. Case in point, a large payday lending operation in Kansas City has been banned from providing loans. This all comes hot on the tail of a $54 million settlement that federal regulators recently announced.
It turns out that the FTC blew the lid on this operation of 14 companies that were owned by two men from Johnson County – Frampton T. Rowland III and Timothy A. Coppinger. The two used online information to take out loans for consumers without express consent or permission. The companies these two operated included Anasazi Group LLC, Sandpoint Capital LLC and CWB Services, LLC. The companies made use of borrower information from folks who went online to get information about payday loans. As we all know, these types of loans are short term, small dollar loans that people pay back over the course of two weeks.
The borrowers would go online and input their sensitive information, including routing numbers and checking account numbers. The sites that these folks plugged their date into are known as ‘lead generators’ with the owners of the sites using the data to help borrowers find a lender to fulfill their fast cash needs. Most of the people who got scammed say that they never officially applied for loans via a complaint that was logged with the FTC.
The company that these alleged fraudsters used bought borrower data from the lead generators and then turned around and deposited loan money, typically in the $200 to $300 range, into the borrowers’ accounts. They would then begin to electronically withdraw up to $90 at a pop for “finance charges” according to the complaint. Here’s the catch, though, the fees did not go toward paying down any of the loan principal. The companies would then allegedly sell the phony loans to debt buying companies, who would, in turn, pester and harass the duped borrowers for even more cash.
People who contested these unauthorized loans would find that the companies would, according to the complaint filed with the FTC, “…misrepresent to the banks that consumers authorized the transactions.” The companies went so far as to manufacture fake loan applications and other bogus documents to try to prove that people agreed to take out these loans.
Additionally, the FTC charged the fraudulent companies with providing misleading information to the borrowers who actually wanted to pursue taking out a payday loan. They did so by misquoting the actual finance charges, payment schedules, APR and number of loan payments. According to the FTC complaint, “For example, instead of paying $390 for a $300 loan (as stated in the loan’s disclosure documents) some consumers have paid defendants more than $1,000” in automatic charges that would occur every two weeks.”
Between 2012 and 2013, the two companies provided around $28 million in payday loans, while withdrawing over $46.5 million from the bank accounts of duped borrowers, according to the FTC. Consumer groups have gone on record as saying that this case demonstrates the perils associated with the buying and selling of personal and financial data on the Internet.
If all the charges leveled against these two men, and their lending companies, turns out to be true, they certainly deserve to have severe penalties leveled against them. These kinds of bogus lending practices don’t happen that often, but when they do lots of people who really need financial services wind up paying a higher cost than they ever planned on paying.
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