FTC Sues ‘Data Broker’ for Millions

PHOENIX (CN) - A data broker sold payday loan applications to third parties who used them to take money from consumers' accounts, the FTC claims in court.

The Federal Trade Commission sued Sitesearch Corp. LeapLab, Leads Company, and their founder John Ayers on Dec. 22.

Sitesearch and Leads Co. are based in Nevada, LeapLab in Arizona; all three operate out of Chandler, Ariz., where Ayers live, according to the lawsuit.

Ayers and his companies operated as data brokers from 2006 to 2013, selling consumer information from payday loan applications to "fraudsters, spammers, and telemarketers," including Ideal Financial Solutions, the FTC says.

Ideal Financial, which is not a party to this complaint, "used the sensitive consumer information to make unauthorized debits to consumer financial accounts," according to the FTC.

It claims that Ayers at al. "provided sensitive consumer information to Ideal Financial, knowing or having reason to know that Ideal Financial was using this information to make unauthorized charges to consumer bank accounts. As a result, defendants caused millions of dollars in consumer harm.

The applications collected by LeapLab "contained the consumer's name, address, phone number, employer, Social Security number, and bank account number, including the bank routing number," the complaint states.

The defendants sold about 5 percent of the applications to online lenders, then sold the remaining 95 percent for 50 cents apiece to nonlenders, the FTC says.

"These non-lender third parties included (1) marketers that made unsolicited sales offers to the consumers via email, text message, or telephone call; (2) data brokers that aggregated and then resold consumer information; and (3) phony Internet merchants, including Ideal Financial, that used the consumers' sensitive information to commit fraud by debiting consumers' bank accounts for purported financial products that the consumers never purchased," according to the FTC.

From 2009 to 2013, Ideal Financial bought "at least 2.2 million consumers' financial information from data brokers and used it to make millions of dollars in unauthorized debits and charges," the FTC says.

It claims Ayers et al. began to sell consumer information to Ideal Financial in February 2012, and provided at least 16 percent of the financial account information of Ideal's victims.

Ideal Financial debited $4.12 million from consumer bank accounts without permission using the information it bought from LeapLab, the complaint states.

The FTC seeks disgorgement, restitution, reformation of contracts and an injunction.

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