FTC Charges Data Brokers Over Payday Loan Scam

Loan ApplicationRemember this story the next time you think about filling out an online loan application and giving away your personal and financial information to the site’s operators.

Earlier this week, the United States Federal Trade Commission announced charges against two data brokers for selling personal and financial information from payday loan applications to scam artists, who then used the information to steal millions of dollars from banking and credit accounts.

Two data brokers, Sequoia One and Gen X Marketing Group, collected online loan applications from various payday loan sites and then sold the applications to fake lending companies.

The applications contained sensitive personal information, including: full names, street addresses, Social Security numbers, bank account numbers, credit card numbers, phone numbers and birth dates.

Ideal Financial Solutions Incorporated was one of the fly-by-night payday loan companies that bought the applications for 50 cents each and then stole millions of dollars from the applicants.

Legitimate payday loan companies often pay upwards of $100 for one of these loan applications.

According to the FTC, between 2009 and 2013 Ideal Financial Solutions bought 500,000 of these loan applications from the data brokers and then allegedly used the information to steal around $7.1 million from the applicants’ bank accounts and credit cards.

Ideal Financial Solutions business operations were stopped in February 2013 by a United States federal court.

The defendants named by the FTC are Sequoia One LLC and Gen X Marketing Group LLC,  along with their operators Jason A. Kotzker, Theresa D. Bartholomew, John E. Bartholomew Jr. and Paul T. McDonnell.

It appears from court records, that Sequoia One and Gen X Marketing Group are just two different names for the same Florida-based data company, since they share offices, employees and owners as well as revenue and expenses.

The Federal Trade Commission charges accuse executives from Sequoia One and Gen X Marketing Group of conspiring with Ideal Financial Solutions to hide the fraudulent charges from applicants with fine print and deceptive language that allowed Ideal Financial Solutions to access customers’ financial accounts.

Three of the people named in the suit have agreed to settle the FTC charges.

According to the agreement, John E. Bartholomew, Jr. and Theresa D. Bartholomew will pay a paltry $15,000 to settle a $7.1 million judgment against them.

A judgment of $3.7 million against Paul T. McDonnell will be suspended due to his inability to pay.

Jessica Rich, one of the Federal Trade Commission’s consumer protection directors, said this case illustrates how easily personal information can be bought from data brokers by scam artists posing as legitimate business people.

This shows just how dangerous it can be when personal information is collected and sold by the wrong people and how something as simple as applying for a loan can cost unsuspecting people a lot of time, money and hassle.