$14.3 Million Fine for Selling Info in Loan Scam

LAS VEGAS (CN) – Two Florida marketing firms must pay $14.3 million for selling consumer information to a payday lender that scammed $43 million from millions of victims, a federal judge ruled.

U.S. District Judge James C. Mahan on Monday ordered Sequoia One and Gen X Marketing Group to each pay $7,135,992, plus post-judgment interest, and permanently enjoined them from “disclosing, using or benefitting from customer information.”

Mahan also permanently enjoined them from helping others sell, transfer or disclose consumers’ personal information to anyone.

The firms also are banned from misrepresenting the likelihood that someone could obtain a loan or line of credit or the terms of a loan of line of credit. Nor may they misrepresent that someone agreed to buy a product or service, get refunds and misstate any other material facts about products or services.

Mahan ordered the penalty after neither company responded to the Federal Trade Commission’s complaint, and default judgment was entered against them on June 30.

In its August 2015 complaint the FTC said the Florida marketing companies knew they were selling consumer information to a dicey payday lender that scammed people for $43 million.

The FTC said that from 2009 until at least 2013, the two companies worked as data brokers, collected sensitive consumer information from 2.2 million consumers seeking payday loans, and sold it to nonlenders such as Ideal Financial Solutions.

Sequoia One and Gen X allegedly bought some of the information and obtained other information through several websites they own, which claim to help people obtain payday loans. However, the data is actually used to “commit fraud by debiting consumers’ bank accounts” for products that people never bought, the FTC said.

“The FTC and defendants Theresa Bartholomew, John Bartholomew, and Paul McDonnell have stipulated to the entry of final orders, which orders were entered by the Court on August 13, 2015,” Mahan wrote in his order. “On July 14, 2016, the FTC and defendant [Jason A.] Kotzker reached a tentative settlement, which settlement is currently being reviewed by the several FTC commissioners.”

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