Payday Loan Lead Generators Settle FTC Charges
June 24, 2008
Two payday loan lead generators have agreed to settle Federal Trade Commission charges that their Internet advertising stated payday loan costs and repayment periods without disclosing annual percentage rate (APR) information as federal law requires. The settlements require the respondents to disclose APR information in similar payday loan ads in the future and to comply in all other respects with the Truth in Lending Act (TILA) and its implementing Regulation Z. APR information helps consumers compare the costs of these payday loans with others and with alternative forms of short-term credit.
In typical payday loan transactions, consumers receive cash in exchange for their personal checks or authorization to debit their bank accounts, and lenders and consumers agree that consumers’ checks will not be cashed or their accounts debited until a designated future date. Payday loans have high fees and short repayment periods, which translate to high annual rates, and they often are due on the borrower’s next payday, usually about every two weeks. For more information about payday loans, see the FTC’s consumer education publication, “Payday Loans = Costly Cash,” available at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm.
The respondents, We Give Loans, Inc. and Aliyah Associates, LLC, d/b/a American Advance, are lead generators based in Minnesota and Arizona, respectively. They advertise payday loans on their Web sites and collect information from consumers through their online applications. The respondents then sell this “lead” information to lenders that ultimately offer payday loans to consumers.
The TILA and Regulation Z require that those who advertise the cost of credit must disclose the APR of the loans to help consumers make better-informed decisions, including assisting them in comparison shopping among loans. According to the FTC’s complaints, the respondents stated loan costs on their Web sites – a $20 fee for a $100 loan, for example – but failed to disclose the APR. For a typical 14-day pay period, consumers who obtained payday loans advertised by We Give Loans, Inc. would pay an APR from 260 percent to 521 percent or higher, and consumers who obtained payday loans advertised by Aliyah Associates would pay an APR of 782 percent.
The proposed consent orders prohibit the respondents from advertising certain credit offers without providing consumers with key disclosures, such as the APR, and bar them from violating the TILA and Regulation Z in any other manner.
Commission Approves Final Consent Order in the Matter of We Give Loans, Inc.; FTC Approves Final Consent Order in the Matter of American Advance.com
September 5, 2008
Commission approval of final consent orders – Following a public comment period, the Commission has approved the issuance of a final consent order in the matter concerning We Give Loans, Inc., as well as the issuance of letters to the commenters of record. The vote approving issuance of the final order was 4-0. (FTC File No. 0723206; the staff contact is Cara Petersen, Bureau of Consumer Protection, 202-326-3224; see press release dated June 24, 2008.)
Following a public comment period, the Commission has approved the issuance of a final consent order in the matter concerning Aliyah Associates LLC, d/b/a AmericanAdvance.com. The vote approving issuance of the final order was 4-0. (FTC File No. 0723205; the staff contacts are Cara Petersen and Quisaira Whitney, Bureau of Consumer Protection, 202-326-3224; see press release dated June 24, 2008.)