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FTC shuts down payday lending scheme

The company was accused of drawing money from consumers’ accounts even after the loan amount had been repaid

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Photo (c) wutwhanfoto - Getty Images
The Federal Trade Commission (FTC) has moved to ban the operators of a massive payday lending scheme that overcharged consumers millions of dollars. 

The agency said the operators of the scheme used deceptive marketing tactics to dupe consumers into thinking that their loans would be repaid in a fixed number of payments. Instead, the company continued to pull money from consumers’ bank accounts “long after the loans’ original principal amount and stated repayment cost had been repaid,” according to the complaint. 

The FTC said the company continued to draw money from consumers’ accounts until they “completely closed their bank accounts or found some other way to cut off payments.” 

Consumer debts cleared

The scheme was carried out under a number of different names, including Harvest Moon Financial, Gentle Breeze Online, and Green Stream Lending. Under the settlement, debts owed to the operators of the scheme will be wiped from the books. 

“These defendants hoodwinked people in financial need by charging much more than promised for payday loans,” Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, said in a statement. “We expect payday lenders to not only honor the terms of their deal but also to refrain from making a never-ending series of unexpected withdrawals from customers’ bank accounts, as these companies did.” 

“Any consumer loan made by the company before it was temporarily shut down as part of the case will be considered to be paid in full if the original amount of the loan and one finance charge have been paid,” the statement continued. 

The FTC said the defendants will be required to turn over all corporate assets and almost all domestic personal assets, as well as a number of vehicles. Those assets will be relinquished to a receiver, which will liquidate the business and provide all proceeds to the FTC.

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