Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Payday loan broker settles FTC charges of deceptive practices, (Jul 11, 2014)

By Linda O’Brien, J.D., LL.M.

The operators of a Tampa-based payday loan broker scheme have agreed to settle FTC charges that they falsely promised to help consumers get loans, but instead used consumers’ personal financial information to withdraw money from their bank accounts without their consent (FTC v. Caprice Marketing LLC, FTC File No. 132-3055, Case No: 13-cv-6072).

In its complaint, the FTC alleges that the defendants, Sean C. Mulrooney and Odafe Stephen Ogaga, and five companies that they controlled, claimed to be affiliated with a network of 120 payday lenders and misrepresented that 80 percent of all applicants received loans with one hour. In fact, the defendants did not lend money to consumers and there was no evidence that they assisted any consumer in obtaining a loan.

According to the complaint, the defendants used consumers’ personal financial information it had collected through its websites to withdraw $30 from the bank accounts of tens of thousands of consumers, without authorization and without providing anything of value in return. The complaint was filed in the federal district court in Chicago in September 2013.

The proposed settlement prohibits the defendants from (1) marketing or providing any credit-related products or services, including loans, prepaid credit cards, debt-relief services, and credit repair services; (2) collecting, selling, or buying consumers’ personal and financial information, except in order to process a specifically authorized transaction; and (3) processing transactions using remotely created checks or remotely created payment orders.

Also under the settlement, the defendants are prohibited from misrepresenting the terms and conditions of any service or product they market, and from charging consumers for anything without their consent. The settlement also requires the defendants to dispose of customer information that they have already collected and not to use, disclose, or benefit from that information.

The FTC announced that the settlement imposes a $6.2 million judgment, which is equal to the defendants’ ill-gotten gains. The settlement requires Ogaga to surrender nearly all his assets: $50,000 in cash, and proceeds from the sale of his 2011 Rolls Royce Ghost, 2007 Lexus LS460, and 2006 Ferrari. Once he surrenders these assets, the remainder of the judgment against Ogaga will be suspended. The judgment against Mulrooney is entirely suspended, due to his inability to pay.

Companies: Caprice Marketing LLC; Nuvue Partners LLC; Capital Advance LLC; Loan Assistance Company LLC; ILife Funding, LLC

News: ConsumerProtection FederalTradeCommissionNews