Online payday lenders

The Federal Trade Commission (FTC) accused online payday lenders SFS and Red Cedar Services of asking consumers to pay inflated fees. The lenders settled the FTCs charges regarding illegal fees. They agreed to pay $2.2 million each and jointly waived $68 million in fees that had not been collected.

So far the FTC has recovered around $25.5 million linked to the case involving SFS, Red Cedar Services, MNE Services, AMG Services and several related individuals and entities.

Around $353 million in debt has also been waived, making this the biggest recovery by the FTC in a payday lending case. Litigation is still ongoing against other defendants.

According to Jessica Rich, Director of the Bureau of Consumer Protection, the lenders are paying a high price for deceiving borrowers and asking them to make extra payments. The lenders and others had misrepresented the cost consumers would have to pay for the loans, violating the FTC Act.

They did not accurately reveal the annual percentage rate and other terms of the loan, violating the Truth in Lending Act (TILA). They also violated the Electronic Funds Transfer Act (EFTA) by making pre-authorized debits from the bank accounts of consumers.

The federal court found that the loan documents were deceptive and they violated the Truth in Lending Act (TILA), as alleged by the FTC. It passed orders prohibiting SFS and Red Cedar Services from misrepresenting the terms of loan products. The defendants were also barred from violating the EFTA and TILA.

The aim of the Federal Trade Commission (FTC) is to educate and protect consumers and to encourage competition. To find out more about your rights as a consumer or to file a consumer complaint, you can contact the FTC at 1-877-FTC-HELP (1-877-382-4357) or at www.ftc.gov.

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Finally! The Federal Trade Commission (FTC) and other Federal, State and Local authorities have pooled their resources in a move to stop unscrupulous and illegal debt collection!

The FTC published in its webpage (http://www.consumer.ftc.gov/blog/ftc-abusive-debt-collectors-youre-outta-business) a sample letter issued by a rogue collection agency to pressure people, during these times of recession and economic difficulties, into paying a debt that they did not owe.

Presuppose you receive a letter like this, how would you feel:

“This is the Civil Investigations Unit. We are contacting you in regards to a complaint being
filed against you, pursuant to claim and affidavit number D00D-2932, where you have been named a respondent in a court action and must appear… Please forward this information to your attorney in that the order to show cause contains a restraining order. You or your attorney will have 24 to 48 hours to oppose this matter… Call 757-555-1234.”

The culprit company, Pinnacle Payment Services used different kinds of dirty tactics including posing as an affiliate of a law enforcement company by using fictitious business names. The Judge ordered that Pinnacle be permanently banned from debt collection or any business that has something to do with debts. They were also fined more than $9,000,000.00.

Illegal debt collection activities are now a priority to the FTC. FTC has expressed a desire to partner with collection agencies to make sure that their practices conform to what is acceptable, legal, and fair. There have been filed over 30 new law enforcement actions bringing to over a hundred the number of actions taken against rip-off artists, scammers and fraudulent and abusive debt collectors.

It is time for the consumer to hit back! No more sleepless nights! Identify them, know their dirty little tactics, gather evidence, and with the help of the FTC, sue them, fight back and get paid! Every consumer deserves to be respected, and no collector may violate his rights nor demean his character and none of them may hinder a consumer’s lifestyle nor harass or threaten them into paying.

With the FTC’s Edith Ramirez, Illinois Attorney General Lisa Madigan, New York’s Attorney General, the National Registry and Minnesota Commerce Department Commissioner’s Mike Rothman taking the initiative in a move called Operation Collection Protection Initiative, over 70 enforcement partners will collaborate with victims of collection harassment to stop scam operators and other illegal collection practices.

These practices may include one or more of the following:

1. Disrespectful or Harassing phone calls
2. False threats of litigation, arrest and wage garnishments
3. Impersonating attorneys, court employees, process servers, policemen
4. Using fake debts or debts the consumer does not owe, to harass
5. Unlawfully disclosing debt information to third parties thereby embarrassing the debtor
6. Not giving the consumer details of the debts or a chance to verify on his own the correctness of the subject amount.
7. Threatening suspension of driver’s licenses, confiscation of one’s properties, litigation, and imprisonment

A lot of consumers pay up in order to avoid embarrassment because they get scared or simply because they want peace of mind.

These threats may come from illicit as well as legitimate creditors for even legitimate creditors sometimes resort to unfair misrepresentation, illegal use of loan information, failure to disclose material facts about their financial products like loans, credit assistance, and debt relief.

With FTC’s efforts, consumers may yet feel relaxed knowing that they are being protected from these illegal collectors.

By the passing day, increasing number of reports regarding loan scams have been received by the Washington State Department of Financial Institutions (DFI). These scams are being conducted by certain people who are claiming to be representatives of firms such as Cash Advance America, Advance America Payday Loans, and Advance America.

How does it work?

A large number of consumers have been the recipients to a lot of phone calls from various people who call and claim to be representatives of these 3 major firms. When consumers receive these scam phone calls, the callers usually offer them loans and borrowings in an exchange for a free, to be paid up front.

In these scam phone calls, customers usually claim to never have applied for any such payday loan amounts, and the callers are insisting that they have been calling in order to discuss the online payday loan applications of these consumers.

As reported by one of the consumers, as soon as she refused to transfer the money to the scam caller, she received a threat that legal action would be taken against her. Some of the consumers, who actually made the payment of the upfront fee, did not receive any loan as was promised by the callers. Such loan offers were also made via email to most of the consumers.

In addition to this, a consumer from Washington received a multitude of harassment calls from someone who claimed to be a representative of Cash Advance America. This particular caller said that the consumer owed the company a debt of a payday loan for the year 2007 and turned down the request to provide any further details pertaining to the debt. And the consumer said that he did not borrow any such loan in the past.

Advance America Payday Loans and Cash Advance America use the contact information that is mentioned below. But the Washington State of Department of Financial Institutions has not licensed these two companies to provide loans or do any business in Washington.

Email Addresses

americacashadv@gmail.com, adam.smith@unitedcashadvance.in, cashadvanceamericas@rocketmail.com

Phone Numbers

818-570-6222, 321-576-1077, 206-855-3292, 315-625-1913, 716-240-0028, 254-212-1137, 707-533-1466, 360-362-5979, 206-973-2544

Advance America is, however, licensed to provide loans. But this company that is licensed is not a part of the scams that have been mentioned above.

Recommended Solutions

DFI is recommending consumers to deal with only lenders that are licensed properly to conduct any business, and one way for consumers to determine if lenders are in fact licensed properly is by using a feature on the DFI website that reads Verify a License.

If consumers have any queries about laws pertaining to debt collection, they are advised to contact the Federal Trade Commission.

One thing to note is that debt collectors are not authorized to state that it is a crime if you fail to repay a debt.  Also, they cannot place calls before 8am or after 9pm, and are not authorized to abuse or harass debtors. Adding to this, consumers’ employment addresses cannot be contacted by them.

Reporting a Fraud

If the residents of Washington find themselves to have any suspicions regarding any sort of unlicensed activities by payday lenders, they should contact or place a complaint to DFI. And if consumers belong to some other state, they should visit NMLS consumer access, where they can find their respective state regulator.

If consumers feel victimized by loan scams, they can either contact the Federal Trade Commission, or the Consumer Financial Protection Bureau. This should be done because consumers become victims of identity theft if scammers have access to their social security numbers and information regarding their bank accounts and should immediately take precautionary methods.

If consumers think that they are victims of any loan scams that involve the internet, then they are advised to immediately contact the Internet Crime Complaint Center by visiting their website online.

All consumers who think that they are victims of loan scams, and have concerns regarding the confidentiality of their personal financial information can either contact their banking institution, or seek help by contacting the 3 main credit bureaus.

Read more about the FTC guidelines to avoid spam here.