Feds Go After Sneaky Payday Lenders

KANSAS CITY, Mo. (CN) - The Consumer Financial Protection Bureau and the Federal Trade Commission accuse a slew of payday loan companies of making unauthorized loans to consumers' bank accounts and then repeatedly withdrawing money from them.

The CFPB and FTC sued a plethora of companies in separate, but similar, lawsuits in Federal Court.

"Defendants, operating through a maze of interrelated companies, use consumer financial information they purchase from third parties to originate online payday loans without consumers' consent," the CFPB complaint states.

"Defendants deposit the payday loans into consumers' bank accounts without their authorization, and then use misrepresentations and false documents to further convince these consumers that they agreed to these phony online payday loans. Defendants then use these purported loans as a basis to make repeated, unauthorized withdrawals from consumers' bank accounts. In some cases, Defendants have bilked consumers out of thousands of dollars in 'finance charges' for a $200 or $300 loan that the consumer never agreed to."

The CFPB and FTC say the defendants buy the consumers' personal and confidential financial information from data brokers.

"For a typical consumer, defendants' scheme works like this: First, they deposit $200 to $300 into the consumer's checking accounts," the CFPB complaint states. "Then they withdraw a $60 to $90 'finance charge' from the consumer's account every two weeks indefinitely. Finally, when a consumer (or the consumer's bank or credit union) contacts defendants to inquire about the charges, defendants use bogus documentation to justify the unauthorized transactions."

The CFPB sued Richard F. Mosely Sr., Richard F. Mosely Jr., Christopher J. Randazzo and online payday loan entities including SSM Group, CMG Group, DJR Group, BCD Group and several Hydra Financial Limited Fund entities.

The FTC sued CWB Services, Orion Services, Sandpoint Capital, Sandpoint and Basseterre Capital, et al.

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