File photo taken in 2014 shows the official seal of the U.S. Federal Trade Commission (Photo: PAUL J. RICHARDS, AFP/Getty Images)
The operators of a payday lending scheme that allegedly bilked millions of dollars from consumers nationwide have agreed to more than $54 million in tentative settlements with the Federal Trade Commission.
Announced Tuesday, the Federal Trade Commission settlements stem from allegations that Timothy Coppinger, Frampton Rowland III and their companies targeted online payday loan applicants — consumers seeking short-term loans to tide them over until they received their next paycheck.
Approximately 400,000 consumers were affected by the scheme, and the settlement funds will be used to reimburse them for losses, the FTC said.
Using information gathered from data brokers and lead generators, the companies allegedly deposited funds in the applicants' bank accounts without obtaining permission. The firms subsequently withdrew money to pay recurring "finance" charges without using any of the funds to pay the total allegedly owed, the FTC alleged.
The companies also allegedly misrepresented the loans' costs, finance charges, annual percentage rates payment schedule and other data.
Consumers who closed their bank accounts in a bid to halt the unauthorized debits subsequently discovered that the
companies had sold the purported loans to debt-collection companies that harassed them for payment, the FTC alleged.
A federal court in Missouri halted the operation and froze the defendants' assets pending resolution of the FTC allegations.
The Coppinger and Frampton limited liability companies involved in the lawsuit include: CWB Services; Orion Services; Sandpoint Capital; Basseterre Capital; Namakan Capital; Anasazi Services; Anasazi Group; Vandelier Group; St. Armands Group; Longboat Group and Oread Group.
The defendants neither admitted nor denied the FTC allegations.
The tentative settlements, which require federal court approval, erase any consumer debt purportedly owed to the defendants and bar them from reporting the debts to credit-reporting agencies.
The agreements also ban the defendants "from any aspect of the consumer lending business, including collecting payments, communicating about loans and selling debt," the FTC said.
If approved by the court, the settlements will impose a more than $32.1 million consumer redress judgement on the Coppinger companies agreed and a similar judgement of nearly $21.9 million on the Frampton companies, the FTC said.
The judgments against Coppinger and Frampton will be suspended upon their surrender of certain assets, the FTC said.
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Category: Payday loans