Regulators File Suit Against Data Broker That Helped Payday Loan Scammer Bilk $7M From Consumers

From time to time, federal regulators shut down shady payday lending companies that debit consumers’ accounts or charge their credit cards without permission. But those nefarious operations have to get their information from somewhere, right? Well, today the Federal Trade Commission sent a message to all of those companies providing such personal information to scammy-mcscammersons by taking action against a data broker operation that illegal sold payday loan applicants’ financial information.

The FTC today announced that it filed a lawsuit [PDF] against Sequoia One LLC, Gen X Marketing Group LLC, and their operators for allegedly selling the financial information of 500,000 individuals to a scam operation that bilked nearly $7.1 million from those consumers’ accounts.

According to the FTC complaint, the data broker enterprise bought loan applications from the operators of payday loan websites and got others directly from consumers via their own payday loan websites.

But instead of passing on those applications to legitimate payday lenders, the FTC alleges the operation sold the data to companies – like Ideal Financial Solutions – that intended to use the information for their own financial gain.

The FTC contends that the data broker operation sold many of its loan applications to Ideal Financial – which the FTC shut down back in 2013 – for about 50 cents each, while legitimate lenders often pay up to $100 or more for such information.

The complaint alleges the operation knew that Ideal Financial was making unauthorized bank account debits and credit card charges, but sold the personal information anyway.

In fact, according to the complaint, the operation actually helped hide Ideal Financial’s fraud by using fine-print disclosures on their websites as well as other misleading tactics to avoid alerting banks to the fraudulent activity.

The data broker operators – Paul T. McDonnell, Theresa D. Bartholomew, and John E. Bartholomew, Jr. – agreed to a proposed settlement order to resolve the FTC’s charges. Under the proposal, the Bartholomews received a $7.1 million judgment that will be suspended upon payment of $15,000. The order against McDonnell imposes a judgment of more than $3.7 million, which will be suspended due to his inability to pay.

FTC Charges Data Brokers with Helping Scammer Take More Than $7 Million from Consumers’ Accounts [Federal Trade Commission]

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