Federal Trade Commission (FTC) Ends Data Broker Operation that Helped Scam $7 Million from Consumers

Operation got personal information from people believing they were applying for a payday loan

Federal Trade Commission (FTC) Ends Data Broker Operation that Helped Scam $7 Million from Consumers
Image: Pixabay
December 2, 2016

The Federal Trade Commission (FTC) has ended a data broker operation that helped scam more than $7.1 million from consumers.

The agency claims that the operation got personal information from individuals who believed they were applying online for a payday loan and then sold the data to a scam tapping the consumers' bank accounts and credit cards without their consent.

A stipulated order against Jason A. Kotzker resolves the FTC's charges from August 2015. The charges claimed that Kotzker and the other defendents sold consumers' personal information to companies such as Ideal Financial Solutions, which raided consumers' accounts, instead of providing it to legitimate payday lenders. The agency also claimed that the defendents helped the company to hide the fraud from banks.

The terms of the order prohibit Kotzker from either selling or disclosing the consumers' sensitive personal information, misrepresenting financial or other kind of product or service, and profiting from such information and failing to dispose of it correctly. The order imposes a judgment of more than $7.1 million to be partially suspended upon the payment of $45,000. This amount represents virtually all of Kotzker's assets.

The terms of the settlement order also prohibit Paul T. McDonnell, Theresa D. Bartholomew, and John E. Bartholomew, Jr. from selling or otherwise benefiting from consumers' personal information. The Bartholomews' order imposed a judgment of $7.1 million suspended upon the payment of $15,000. McDonnell's order imposed a judgment of more than $3.7 million that was suspended as a result of his inability to pay. The full judgments will become due immediately for all defendants if it is discovered that they have misrepresented their financial condition.

The court also entered a default judgment against corporate defendants Sequoia One and Gen X Marketing Group.