At the request of the Federal Trade Commission, a federal court has halted an online operation that allegedly debited consumers’ bank accounts without their consent when consumers visited the defendants’ websites seeking payday loans. The court also froze the defendants’ assets, pending further court proceedings. As part of its continuing efforts to protect financially strapped consumers during the economic downturn, the FTC seeks to permanently stop the illegal practices and make the defendants refund consumers’ money.
According to the FTC’s complaint, the defendants’ websites, such as citywestfinancial.com, mypaydayangel.com, paydaypickup.com, juniperloans.com, northcitymutual.com, and mycashpickup.com, asked for consumers’ personal and financial information, such as social security, driver license, and bank account numbers.
The websites contain what appear to be online application forms for a paydayloan. For example, on mypaydayangel.com, the header advertises “Get cash up to $500 as soon as 1 hour!” and “Easy to Apply – Approved in Minutes – Cash in Your Account.”
A header for the citywestfinancial.com site simply states: “your payday loan specialists.” Apart from the application form itself, the websites appear focused almost entirely on the payday loan and what infomation is needed to obtain it. However, the websites are not online applications for payday loans, but instead are vehicles to collect financial information from consumers. With this information, they enroll consumers into their programs for which they charge membership fees.
Near the end of the application form, the defendants offered unrelated “Direct Benefits” and “Voice Net” programs for food, travel and merchandise discounts, or for long distance calling and Internet access. Many consumers who clicked to “submit” a payday loan application were enrolled unwittingly into the programs, which initially charged their bank accounts up to $59.90 per month, and later charged up to $99.90 per year. Consumers often did not notice the program offers, and some people who declined the offers were charged for the programs anyway, the FTC alleged.
As alleged in the complaint, the defendants sent consumers’ bank account information to Landmark Clearing Inc. and other payment processors to electronically generate remotely created payment orders that debited consumers’ bank accounts. Consumers typically discovered the problem when an unexpected debit appeared on their bank statement, or when their bank told them their account was overdrawn. They learned that Direct Benefits or Voice Net received the payments only after they contacted their bank or saw an online copy of the payment order. Consumers who called the defendants for a refund often got the run-around. Many consumers had to dispute the transaction or close their bank accounts to get a refund or stop the defendants from debiting their accounts.
They make it very difficult for consumers to obtain a refund. Consumers calling the toll-free numbers frequently find it difficult to reach a live representative. Usually, there is a lengthy recorded message explaining the program and, thereafter, consumers are either placed on hold for long periods of time or not provided the opportunity to leave a voicemail message.
When consumers finally get through to speak with a ‘real person,’ the representatives routinely dismiss the consumers’ complaints and tell the consumers that they signed up for the program and agreed to pay the enrollment fee.
In order to get a refund of their money or stop the debiting of their bank accounts, many consumers have to dispute the transaction or even close their bank accounts.
The defendants are charged with violating the FTC Act by obtaining consumers’ bank account information and debiting their accounts without their consent, and failing to adequately disclose that, in addition to using consumers’ financial information for a payday loan application, they would use it to charge consumers for enrollment in unrelated programs and services.
The FTC complaint names Direct Benefits Group LLC, also doing business as Direct Benefits Online and Unified Savings; Voice Net Global LLC, also doing business as Thrifty Dial; Solid Core Solutions Inc.; WKMS Inc.; Kyle Wood; and Mark Berry.
As part of this FTC action the court placed a freeze on all the assets of the named defendants and the appointed a temporary receiver. – Source