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FTC Charges Internet Payday Lender

The Federal Trade Commission, the nation's consumer fraud protection agency, reported on Thursday that they and the State of Nevada are charging an internet payday loan company and its principals with violating federal and state laws by failing to disclose loan terms and by using abusive and deceptive loan collection tactics.

The payday loans didn't comply with payday lending laws in most states and the "lending company" wasn't licensed to make payday loans in those states.

The corporate defendants are Cash Today, Ltd., The Heathmill Village, Ltd., Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Lotus Leads, Inc., First4Leads, Inc., Rovinge International, Inc., and The Harris Holdings, Ltd., each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and BIG-INT, Ltd. The individual defendants are Aaron Gershfield, Ivor Gershfield, and Jim Harris.

The loan company, mainly based in the United Kingdom, has a number of websites offering consumer loans, such as "cash2day4u.com." They offered borrowers loans of $500 or less, and promised that no credit check, proof of income, or documentation was required.

They promised to deliver funds directly into the borrower's bank account within 24 hours. The typical loan amount was for about $200, and the lenders called the borrowers to explain that the loan must be paid by their next payday, with a lending fee of anywhere from $35 to $80.

If the loan wasn't repaid by the next payday, the loan would automatically be extended for an extra fee, and that the fee would be taken directly from the borrower's bank account "until the loan is repaid."

Some customers were told to call the lending company before their next payday to have the full payment debited from their bank accounts - surely a condition to ensure that "extension fees" could be assessed repeatedly.

The payday scam lenders are charged with violating the Truth in Lending Act. Borrowers never received loan terms in writing, including the APR, payment schedule, the amount of the loan, the total number of payments, or late fees. The conditions of the loan were discussed over the phone.

If borrowers asked for terms in writing, they were told that it was an oral transaction. Some borrowers were told they would receive disclosures in the mail after the loan was processed via phone, but never received the documents.

The defendants are also charged with violating the FTC Act by using unfair and abusive collection tactics. After paying the lenders far beyond what was originally borrowed, many decided they had more than paid off the loan and terminated the lender's further access to their bank accounts.

The lenders then resorted to making threatening phone calls to regain access to the borrower's bank accounts. The defendants called the borrowers to falsely claim that they could enforce loan payment with jail time, lawsuits, property seizure, and wage garnishment. These nasty individuals even resorted to disclosing the borrowers' "debts" to employers and co-workers.

Red Flags at the Scam Loan Website
I went to the website just to check it out, since it's not very often that I know the web address of a fraudulent company. The first thing I noticed about the site was that it went straight to a loan application where it asks for personal identifying information, including social security number and bank account and routing numbers.

The second thing I noticed was that the address bar indicated that it wasn't even a secure site. So not only will the applicants have to worry about these tricksters having direct access to their bank account, but they will have to worry about this information being intercepted by a third party who may want to steal their bank savings or their identity.

Under the site's Q&A section, they specifically say that the customer can pay the loan back when they want to, and that the lender is happy to extend the loan past the borrower's next payday, with no mention of additional fees.

Under the question regarding the cost of the loan, they simply say that "the fees are less than the cost of bounced checks, expensive overdraft fees and even the possibility of losing your job because you can't get there. Fees are based on the information you provide us when applying." That's funny, there is no credit check, and credit history is the number one factor in deciding credit fees among legitimate lenders.

I also thought it was interesting to read the long, detailed, and confusing notice and disclosure (780 words of run-on sentences that made little sense). It started off by saying that the borrower would not participate in any class actions, lawsuits, or disputes about the company's loan collection tactics or claiming that the company acted in a fraudulent or deceptive manner.

It ends by saying that the lender may collect fees and payments directly from the borrower's bank account in a virtually unlimited number of ways. This company is a high-tech loan shark - disguising itself as a legitimate money lender.

Tucked into the middle of the attempt at legal jargon is the single sentence, "You will be charged additional fees if you renew the loan." It's the only sentence that's written in plain English out of the entire disclosure, smack in the middle of a contract that many wouldn't even bother to read because of the confusing way it's written.

It's clear to me that this company run by scam artists thought that they could avert legal action by requiring borrowers to sign away their protection rights - good thing that the law over-rides their illegal contract.

I written several articles on avoiding becoming a fraud victim and preventing identity theft, but I will say it again - Please be very careful about giving personal information over the web. Any one can build a website to look like a reputable company.

Especially in these difficult economic times, identity thieves and predators will have much opportunity to steal from the uninformed. And be very cautious when any company or individual skirts the real issues and focuses on what they're "giving you" without giving you a clear explanation of what you're going to do for them.

I included the FTC's list of defendants at the beginning of the article so that consumers will know specifically which companies to run from, but also keep in mind there are numerous others that we aren't aware of yet. The FTC works to protect consumers against bad business practices, but they can only know to investigate the suspected companies if consumers report them.

Please contact the Federal Trade Commission at www.ftc.gov if you've been victimized by this company or any company that you suspect engages in fraudulent, abusive, or misleading tactics.



Sources:
The Federal Trade Commission
cash2day4u.com
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Monday, 19 August 2019

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