FTC Charges Payday Lenders Involved in Scam
At the end of February 2012, the Federal Trade Commission (FTC) began looking into fraudulent payday loan phone calls from India, where callers claimed to be police or officials from the Department of Justice and threatened Americans with arrest and lawsuits if payday loan debt was not repaid.
It didn’t take much time for the FTC to identify the suspects associated with the payday loan scam. On April 5th, 2012, the FTC filed a lawsuit against Broadway Global Master and In-Arabia Solutions. The FTC charged these two payday loan companies with deceptive and illegal collection practices that violated the FTC Act and the Fair Debt Collection Practices Act.
Many of the Americans threatened never had a payday loan, or, if they did, had already repaid the payday loan. Both the severe threats and the detailed personal information the callers possessed frightened victims into paying the demanded amount.
The FTC claimed that the personal information was obtained from online payday loan applications submitted by the victims. Though there has been no insight into how this information was retrieved, it emphasizes the importance of only applying for online payday loans through reputable payday lenders and payday loan sites (like us).
A federal court order temporarily froze the assets of Broadway Global Master and In-Arabia Solutions and suspended their businesses. The FTC plans seek refunds for victims, who were scammed out of $4.2 million, or, on average, $500 each.
It is important to understand your rights as a consumer. Review the blog posting, Know Your Rights - Avoid Payday Loan Scams, to learn what types of collection practices are legal and what types of collection practices are fraudulent. Contact the Attorney General’s Office or the Federal Trade Commission if you believe you are being harassed.