FTC Squashes Payday Site For Putting $54.95 Charge For Empty Debit Card In Fine Print

You’re broke. How would you like a $54.95 debit card? It’s empty, but if you ever do get any money, you can put up to $2,500 on it. Yay. If that doesn’t sound like a bargain, it’s no wonder that one internet marketer of payday loan referral sites was hiding the fact that he was signing you up for these dodo cards via a pre-checked checkbox on the signup form, and the FTC smacked him down for it.

Since most payday loan sites make you give them your bank account info first, he was able to reach in and snag that cash from consumers. Of course, those who are shopping for payday loans can could ill afford to lose $54.95 in the first place.

The FTC said no way jose, and he settled with them for $850,000.

Always read that fine print! You never know what new sneakiness someone is going to hide in there.

Technology Officer of PayDay Loan Marketer Settles FTC Charges That PayDay Loan Websites Were Unfair and Deceptive [FTC via Slate]

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  1. milkcake says:

    I agree with reading fine prints, but I got no time to read the whole thing every time I have to buy something. Need some regulation for pointing out all the “most likely” disadvantages that customers might have starting with possible charges.

  2. Macgyver says:

    I would never, ever, use a payday loan site, and give them my account info.
    But people should learn to read the fine print.

    • trey says:

      and i am sure the the ones that use this service are so happy to use such a service.

      the market is there for the desolate that believe there is nowhere else to turn, but since you have never fallen on hard times and judging by your statement you never will fall on hard times then you have nothing to worry.

      • kcarlson says:

        I think the issue is with payday loan *websites*, rather than all payday loan services.
        (Although the service fees/interest rates are probably going to be astronomical in either case…)

  3. Warren - aka The Piddler on the Roof says:

    Can we please round up all the Internet scammers, SPAMmers and dime-a-dozen douche bags like this that con money from people, put them on a rocket ship and send them out into space. It doesn’t matter where, let’s just get them off the planet. I mean really. What purpose do they serve?

    • Foot_Note says:

      I thought we did that already with the phone cleaners?

    • guroth says:

      That would cost too much, rocket fuel is expensive. We should just round them all up in camps and then execute them en masse by some really cheap method, like gassing or burning them.

      Oh wait.

      • Warren - aka The Piddler on the Roof says:

        Yeah, because what I jokingly suggested is just like the Holocaust.

        Idiot.

  4. Loias supports harsher punishments against corporations says:

    Waiting for the posts blaming payday loan users because they are poor.

  5. RayanneGraff says:

    I have had to use a payday loan in the past. It’s not just poor, irresponsible people that need these services. People should not have to read all the fine print just to avoid having $55 STOLEN from them. I hate shit like this, way to shit on people who are already pretty much at rock bottom.

    • Portlandia says:

      The entire premise of the payday loan industry is to shit on people while they’re down. I agree they provide a service and it helps many people out of a jam, but most peope don’t use them just once and they get caught up in revolving fees and interest that make it impossible to bring your head above water.

  6. Economists Do It With Models says:

    (I mean this in no way to be insulting to people using payday loan companies, but rather to highlight the douchebaggery of the comanies themselves.) I am curious as to what percentage of the payday loan customers are even good enough readers to fully notice and internalize this sort of thing, since I’m guessing it’s not exactly stated in straightforward language…

  7. Economists Do It With Models says:

    (I mean this in no way to be insulting to people using payday loan companies, but rather to highlight the douchebaggery of the companies themselves.) I am curious as to what percentage of the payday loan customers are even good enough readers to fully notice and internalize this sort of thing, since I’m guessing it’s not exactly stated in straightforward language…

    • TasteyCat says:

      Most people just proceed on websites without even bothering to read what they’re getting themselves into. I’ve seen a bunch of people where I work signup for autopay without realizing it because they checked a box assuming they needed to do so in order to proceed. It’s like EULAs in software… everybody agrees, but nobody reads them (not even the companies that make the software sometimes).

  8. TasteyCat says:

    $54.95 * hundreds of thousands – $850,000 – $52,000 (debit card company settlement) = Millions in profit

  9. Cerianna says:

    Let’s not forget that most internet-based pay day loan companies are not licensed to lend legally in ANY state. This isn’t true for the internet arm of brick-and-mortar companies, but still…the majority out there are illegal and charge fees that would make even the legal ones flush with envy.