The Federal Trade Commission is cracking down on a data broker who allegedly played a central part in the scamming of payday loan applicants.
The Arizona-based company LeapLab, bought the short-term high-interest loan applications and knowingly sold them to marketers without a “legitimate need” for them, according to the FTC lawsuit. One of those companies–the target of other FTC litigation–stands accused by the federal agency of using the information to plunder millions of dollars from payday loan applicants.
The lawsuit was filed Monday at a District Court in Phoenix, Ariz.
Director of the FTC Bureau of Consumer Protection Jessica Rich ,on Tuesday, described LeapLab as doing harm “twice.”
“First by facilitating the theft of their money and second by undermining consumers’ confidence about providing their personal information to legitimate lenders,” she said in a statement issued by the FC.
The federal agency is seeking a refund for alleged victims, money for the cost of litigation, and a permanent injunction against “future violations of the FTC Act.”
The FTC said that LeapLab obtained the sensitive information through media used to connect payday loan applicants with lenders. The company then sold 95 percent of the applications it purchased for “$0.50 each to third parties who were not online lenders and had no legitimate need for this financial information,” the FTC alleged. Court documents filed by the agency say that among LeapLab’s “illegitimate” customers were digital marketers, telemarketers, other data brokers, “and phony internet merchants.”
Ideal Financial Solutions, the company accused of engaging in mass theft with data it obtained from LeapLab, allegedly bought files on 2.2 million consumers between 2009 and 2013. It used those documents, the FTC claimed, to make millions in “unauthorized debits and charges.”
The federal agency said LeapLab was the broker for information pertaining to at least 16 percent of the targets, and that it had to have been made aware of Ideal Financial’s activities, in part, because it hired “a key executive” from the company.
