FTC Gets $4.1M Judgment Against Fake Payday Lender

Morgan Lewis Principal On Payday Loan Debate

The Federal Trade Commission (FTC) announced Tuesday (Oct. 17) it had obtained a $4.1 million judgment and a ban on a payday lender.

In a press release, the FTC said a federal court issued a default judgment granting the more than $4 million and a ban on the defendants handling certain financial information about consumers’ debt. According to the FTC, the judgment was against Joel Jerome Tucker, SQ Capital LLC, JT Holdings Inc. and HPD LLC. The FTC alleged the defendants sold lists of fake payday loan debts with the names of millions of consumers, which debt collectors then used to demand payments.

The lists included personal information such as Social Security numbers and bank account numbers. Many people, as a result, were harassed regarding debts they did not actually owe, and some even paid the fake debts, noted the FTC.

Many of the lists sold to debt collectors claimed to be from a made up lender, Castle Peak, or from online lender 500FastCash. To make it seem more credible, the FTC contends Joel Tucker used his brother’s name, Scott A. Tucker, a payday loan vendor who sold loans for 500FastCash. Scott Tucker was ordered in Oct. 2016 to pay $1.3 billion for tricking consumers and illegally charging them undisclosed and inflated fees.

“The judgment announced directs the defendants to pay more than $4.1 million they received from selling phony debt portfolios,” the FTC said in the press release. “It also bans them from handling sensitive debt information, including bank account numbers, credit or debit card numbers or Social Security numbers. The order requires the defendants to destroy the personal information they used, and prohibits them from misrepresenting material facts about debts and any product or service [in the future].”

The FTC noted the U.S. District Court for the District of Kansas denied the defendants’ request to excuse their default judgment, entering the default judgment against them at the end of September.