FTC: Data Broker Sold Financial Information to Scam Operation

FTC: Data Broker Sold Financial Information to Scam Operation
Image: Pixabay
August 12, 2015

A data broker illegally sold financial information from payday loan applications to a scam operation that debited millions of dollars from consumers' bank accounts and charged their credit cards without their consent.

A settlement with the Federal Trade Commission (FTC) imposed harsh financial penalties on the defendants, but those penalties have been partially or completely suspended due to their inability to pay.

According to the FTC's complaint, the data broker enterprise bought loan applications from the operators of payday loan websites, and got others directly from consumers via their own payday loan websites.

But, instead of passing on those applications to legitimate payday lenders, the defendants sold the information to companies like Ideal Financial Solutions Inc., which purchased the financial account information for more than 500,000 consumers. Financial Solutions Inc., then raided their accounts for at least $7.1 million. As a result, some consumers had to close their accounts or were charged fees for insufficient funds.

The defendants often sold payday loan applications to Ideal Financial for about 50 cents each, while legitimate lenders pay up to $100 or more. The complaint alleges they did this knowing that Ideal Financial was making unauthorized bank account debits and credit card charges.

In fact, according to the complaint, the defendants helped hide Ideal Financial's fraud by using fine-print disclosures on their websites as well as other misleading tactics to avoid alerting banks to the fraudulent activity.