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FTC Charges Payday Lender in Scheme to Collect Debts With Wage Garnishment

The Federal Trade Commission has charged a payday loan operation with illegally trying to garnish borrowers’ wages and using other illegal debt-collection practices. The FTC seeks to stop these practices and require the operators to surrender improperly collected money so it can be used for consumer refunds.

According to the FTC’s complaint, the operators do business as Ecash and GeteCash, offering loans of up to $1,000 to be repaid from a borrower’s upcoming paycheck. They require online loan applicants to check a box indicating their agreement with loan terms. These terms include an inconspicuous statement consumers often don’t see, which states that their wages will be garnished to cover delinquent loan payments. The statement allegedly attempts to circumvent federal requirements, including a debtor’s right to revoke a garnishment agreement.

U.S. law allows federal agencies to require employers to garnish employees’ wages without a court order when the employees owe the government money. According to the complaint, in letters to employers, GeteCash tries to pass itself off as having the same collection rights as the government. The FTC’s complaint also alleges that GeteCash falsely stated that consumers knew their pay would be garnished and had an opportunity to dispute the debt. In addition, GeteCash allegedly violated the law when it told employers and co-workers about consumers’ debt without their consent.

The FTC alleges that, in carrying out their scheme, the operators violated the FTC Act, the Fair Debt Collection Practices Act, and the Credit Practices Rule. The defendants are Eastbrook LLC, also doing business as Ecash and GeteCash; LoanPointe LLC; Joe S. Strom; Benjamin J. Lonsdale; James C. Endicott; and Mark S. Lofgren. Eastbrook, LoanPointe, and Strom have agreed to a preliminary injunction barring them from further unlawful practices.

The Commission vote to file the complaint was 4-0. It was filed in the U.S. District Court for the District of Utah, Central Division on March 15, 2010.

The complaint filed by the FTC gave more information.

Defendant LoanPointe, LLC is a Utah limited liability company with its principal place of business at 11529 North Bull River Circle, Highland, Utah. LoanPointe transacts or has transacted business in this District and throughout the United States.

Defendant Eastbrook, LLC, also doing business as Ecash and GeteCash, is a Utah limited liability company with its principal place of business at 696 North 1890 West, Provo, Utah. Eastbrook transacts or has transacted business in this District and throughout the United States.

Defendant Joe S. Strom is a manager, officer, or principal of Eastbrook and LoanPointe. At all times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Strom resides in this District and, in connection with the matters alleged herein, transacts or has transacted business in this District and throughout the United States.

Defendant Benjamin J. Lonsdale is a manager, officer, or principal of Eastbrook. At all times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Lonsdale resides in this District and, in connection with the matters alleged herein, transacts or has transacted business in this District and throughout the United States.

Defendant James C. Endicott is a manager, officer, or principal of LoanPointe. At all times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Endicott resides in this District and, in connection with the matters alleged herein, transacts or has transacted business in this District and throughout the United States.

Defendant Mark S. Lofgren is a manager, officer, or principal of LoanPointe. At all times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Lofgren resides in this District and, in connection with the matters alleged herein, transacts or has transacted business in this District and throughout the United States.

Defendants LoanPointe and Eastbrook have operated as a common enterprise while engaging in the unlawful acts and practices alleged below. Defendants have conducted the business practices described below through interrelated companies that have common ownership, officers, managers, business functions, employees, and office locations, and have commingled funds. Because the corporate Defendants have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices alleged below. Individual Defendants Strom, Lonsdale, Endicott, and Lofgren have formulated, directed, controlled, had the authority to control, or participated in the acts and practices of the corporate Defendants that constitute the common enterprise.

You can read the rest of the complaint, here.

FTC Charges Payday Lender in Scheme to Collect Debts With Wage Garnishment
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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