Operators Of Massive Payday Loan Scheme Banned From Industry

The masterminds behind a massive payday loan scheme have agreed to be banned from the consumer lending industry to settle federal regulators’ charges they bilked millions of dollars from customers by trapping them into loans that were never authorized.

The Federal Trade Commission announced today that Timothy A. Coppinger and Frampton T. Rowland III will be banned from future lending endeavors for their part in operating 19 different, but connected, companies that issued a total of $28 million in unauthorized payday loans during an 11-month period in 2012 and 2013.

According to the FTC complaint [PDF] filed last year, the companies targeted online payday loan applicants and, using information from lead generators and data brokers, deposited money into those applicants’ bank accounts without their permission.

The operators then withdrew recurring “finance” charges without using any of those funds to pay down the principal owed.

Coppinger and Rowland, along with their employees, allegedly told consumers they had agreed to — and were obligated to pay for — the unauthorized loans.

The companies supported these claims by providing fake loan applications or other loan documents purportedly showing that consumers had authorized the loans. If consumers closed their bank accounts to stop the unauthorized debits, the defendants often sold the loans to debt buyers who then harassed consumers for payment.

In addition to issuing unauthorized loans and making consumers pay for the debt, the companies allegedly misrepresented the finance charge, annual percentage rate, payment schedule and total number of payments in documentation.

Under the FTC’s settlement with Coppinger and Rowland, the operators are required to provide redress in the form of $32 million and $22 million, respectively. However, with the surrender of certain assets, the FTC says those judgements are suspended.

The operators are banned from any aspect of the consumer lending business, including collecting payments, communicating about loans, and selling debt. The settlement also erases any debt the defendants are owed by victims of the scheme.

FTC Action Stops Massive Payday Loan Fraud Scheme [Federal Trade Commission]

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