Feeds

FTC sues internet 'loan sharks' for deceptive lending

Accused of'abusive and deceptive' collection tactics

The essential guide to IT transformation

Alleged internet payday loan sharks are being sued for failing to disclose loan terms and strong-arm collection tactics by US consumers watchdogs.

The Federal Trade Commission and the State of Nevada have charged 10 related internet payday lenders, many based in the UK but trading in the US, with supplying unethical loans that allegedly breach US federal and state laws.

Websites such as www.cash2day4u.com, one of the defendants, typically offered loans of up to $500 without credit checks or proof of income, the FTC claims. Would-be applicants were only asked for their bank account details and social security numbers.

Applicants were told they would be able to get a loan, typically around $200, within 24 hours but that it had to be repaid by their next payday in addition to usurious fees of between $35 to $80. Failure to repay the loan in full would result in extra fees.

Consumers were allegedly not provided with loan terms, including details of annual percentage rates for loans or late payment fees. After reportedly repaying the defendants many hundreds of dollars more than loan amounts some consumers told their banks not to pay out on any further demands, or closed the affected accounts. This provoked "abusive and deceptive collection calls from the defendants", according to the FTC.

The loans failed to comply with applicable payday lending laws but consumers were falsely told they were legally obliged to repay by the unlicensed lenders. The defendants allegedly threatened consumers with arrest, property seizure or wage packet deductions. The defendants "repeatedly called consumers, coworkers and employers at their workplace, using abusive language and disclosing consumers' purported debts," the FTC complaint states (pdf).

Defendants in the case were named as 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. The firms ran their business as Cash Today, Route 66 Funding, Global Financial Services International, Interim Cash, and BIG-INT.

Individual defendants in the case were named as Aaron Gershfield, Ivor Gershfield, and Jim Harris.

The defendants are charged with violating the FTC Act through the alleged use of unfair and deceptive collection tactics. They are also charged with breaching the Truth in Lending Act and other statues by failing to supply loan terms to applicants. The FTC lawsuit, filed in Nevada, seeks fines and an injunction against the defendants. ®

The essential guide to IT transformation

More from The Register

next story
Britain's housing crisis: What are we going to do about it?
Rent control: Better than bombs at destroying housing
Top beak: UK privacy law may be reconsidered because of social media
Rise of Twitter etc creates 'enormous challenges'
GCHQ protesters stick it to British spooks ... by drinking urine
Activists told NOT to snap pics of staff at the concrete doughnut
What do you mean, I have to POST a PHYSICAL CHEQUE to get my gun licence?
Stop bitching about firearms fees - we need computerisation
Ex US cybersecurity czar guilty in child sex abuse website case
Health and Human Services IT security chief headed online to share vile images
We need less U.S. in our WWW – Euro digital chief Steelie Neelie
EC moves to shift status quo at Internet Governance Forum
Oz biz regulator discovers shared servers in EPIC FACEPALM
'Not aware' that one IP can hold more than one Website
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.