FTC Obtains Court Order Against Scheme that Sold Fake Payday Loan Debt Portfolios

The Federal Trade Commission has obtained a $4.1 million judgment and a ban on handling certain sensitive financial information about consumer debts against an operation that sold lists of fake payday loan debts to debt collectors.

A federal court issued a default judgment granting what the FTC sought in a complaint filed in 2016. The complaint alleged that Joel Jerome Tucker, SQ Capital LLC, JT Holdings Inc. and HPD LLC sold lists of fake payday loan debts naming millions of consumers, which debt collectors then used to demand payment. The lists had extensive personal information, including social security and bank account numbers. As a result, many people were harassed for debts they did not owe, and some were persuaded to pay the fake debts.

Several of the sold lists claimed that the phony loans came from a made-up lender, “Castle Peak,” or from an online loan provider known as “500FastCash.” To add credibility to the fake 500FastCash payday loans, Joel Tucker invoked the name of his brother, Scott A. Tucker, a payday loan vendor who marketed loans under the 500FastCash brand. In a previous FTC case, in October 2016, Scott Tucker was ordered to pay $1.3 billion for deceiving consumers and illegally charging them undisclosed and inflated fees. He was recently found guilty of related criminal charges in the Southern District of New York.

The judgment announced today directs the defendants to pay more than $4.1 million they received from selling phony debt portfolios. It also bans them from handling sensitive debt information, including bank account numbers, credit or debit card numbers, or social security numbers. The order requires the defendants to destroy the personal information they used, and prohibits them from misrepresenting material facts about debts and any product or service.

The U.S. District Court for the District of Kansas denied the defendants’ request to excuse their default and, at the FTC’s request, entered the default judgment against them on September 20, 2017.

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