The FTC has recently filed a case against Sequoia One, LLC and Gen X Marketing Group, LLC as well as several individuals within those companies, for violating section 5 of the Federal Trade Commission Act. This is the section that prohibits unfair and deceptive acts or practices in or affecting commerce. The letter issued from the FTC says that the misconduct took place in relation to the sale of payday loan application leads.
The companies involved generated leads for the popular payday loan services, and then used or sold those leads in a variety of ways. The FTC, however, is claiming that they also provided the information they gathered to Ideal Financial Solutions. The information they provided included names, social security numbers and bank account information. Ideal Financial Solutions then used that data to debit money from the consumer bank accounts. It seems the money they debited was related to other financial obligations that were owed (likely due to previous payday loans).
The FTC says that Ideal Financial Solutions, “debited at least $7.1 million from consumer bank accounts without authorization.” This is obviously a very significant amount of money.
While no official defense has been made yet, it is likely that the defendants will argue that providing this data to third party non-lenders was indeed in their terms and conditions that was on the webpage. The FTC, however, typically does not accept ‘fine print’ disclaimers as sufficient warning for the consumers, and it is unlikely that they will do so in this case.
The FTC has offered to settle the case for, among other things, $3,773,144. This money would, in part, be used to provide relief to those who had money debited from their accounts as a result of this.
If the defendants do not accept, they will have the opportunity to present their case in court.
We here at Performance Marketing Insider are in contact with one of the defendants, Paul McDonnell and working on setting up an interview about this case.