The U.S. Federal Trade Commission said on
Wednesday it charged a data broker operation with selling payday
loan applicants' financial information to scammers who took in
millions of dollars by debiting bank accounts and charging
The data brokers bought the loan applications and, instead
of passing them to legitimate payday lenders, sold them to
companies including Ideal Financial Solutions Inc, which bought
500,000 applications and raided the accounts for at least $7.1
million, the FTC said.
"Scammers used consumer information they bought from this
operation to make millions in unauthorized charges," said
Jessica Rich, director of the FTC's Bureau of Consumer
Protection. "Companies that collect people's sensitive
information and give it to scammers can expect to hear from the
The FTC identified the defendants as Sequoia One LLC, Gen X
Marketing Group LLC, Jason A. Kotzker, Theresa D. Bartholomew,
John E. Bartholomew Jr., and Paul T. McDonnell.
McDonnell and the Bartholomews have agreed to settle, the
commission said, under an order that prohibits them from selling
or otherwise benefiting from customers' personal information.
The order's $7.1 million judgment against the Bartholomews will
be suspended upon payment of $15,000, it said.
The FTC documents were filed in U.S. District Court in
Nevada and the final orders are subject to court approval.
Payday loans are small extensions of credit that borrowers
agree to repay in a short time, such as when they next receive a
paycheck. Lenders who offer the products say they help people
who are strapped for cash but consumer advocates say borrowers
often end up with high debt because of high interest rates, fees
and rolling over the loans.