A debt relief operation, which went by the names “Payday Support Center” and “Infinity Client Solutions,” has been banned by the Federal Trade Commission from the debt relief business under a settlement with the FTC.
In an FTC announcement, the government agency said the company targeted consumers with outstanding payday loans, falsely promising to resolve consumers’ payday loans via their hardship program. Once the consumer was enrolled, consumers stopped making payments to their lenders, but the company failed to provide the debt relief it promised. Consumers ended up in worse financial trouble after paying hundreds of dollars for no reduction or settlement of their loans. In Feb. 2015, the FTC filed a complaint against Jared Irby, Richard Hughes, Coastal Acquisitions LLC and PSC Administrative LLC.
The FTC said in the announcement on Thursday (Sept. 8) that, under two final orders, the defendants are banned from all debt relief-related activities and are prohibited from making misrepresentations about financial and other products and services. What’s more, they are prohibited from making unsubstantiated claims about any products or services. The orders also bar the defendants from profiting from consumers’ personal information and failing to dispose of it properly. Each order imposes a judgment of more than $23.7 million that will be partially suspended when Irby and the corporate defendants pay $149,537 and Hughes pays $8,037.26. In each case, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition, the FTC said.
Payday lenders have been in the spotlight for years, as regulators have kept an eye on the industry that many contend charges people a lot of money for their payday loans. For a large number — but not a majority — of borrowers, taking out a high-interest, short-term loan kicks off a cycle of debt that generates fees well in excess of the original loan amount that are paid before said borrower defaults under the collective weight of those fees continually stacking up over time. That process can often be accompanied by racking up additional overdraft fees if attempts to remove the lump sum loan payment encounters an insufficient funds bounce or two. Some consumers, however, pay back their loans without renewing them at all, and multiple renewers tend to settle up without a “never-ending cycle of debt,” PYMNTS’ Karen Webster noted in a post about payday loans.