U.S. district court shuts down phony payday lender

scam-alert-pic-150x150There will be tips at the bottom, but I’m also going to start this one with a tip:

DO NOT enter your financial information in an online form until you know the company and website are legitimate. That’s a recipe for identity theft.

Case in point…

A U.S. district court agreed to the Federal Trade Commission’s request and shut down a phony payday loan broker that ripped consumers off by off more than $5 million. The Tampa Florida-based operation used numerous websites promising to help people find loans. Instead, the FTC alleges, they just debited consumers’ bank accounts in increments of $30.

According to the FTC, the defendants claimed to be affiliated with a network of 120 potential payday lenders and that 80 percent of applicants got loans in as soon as an hour.

The court order freezes the defendants’ assets to so money can possibly be returned to consumers.

Defendants include Sean C. Mulrooney and Odafe Stephen Ogaga and five companies they controlled. They allegedly used websites called Vantage Funding, Ideal Advance, Loan Assistance Company, Palm Loan Advances, Loan Tree Advances, Pacific Advances, and Your Loan Funding to collect names, Social Security numbers, bank routing numbers, and bank account numbers. The information they gathered allowed them to access checking accounts. The defendants also allegedly paid over $500,000 to third parties for other consumers’ financial information and debited their accounts as well.

The defendants ripped off tens of thousands of consumers, withdrawing more than $5 million from their bank accounts. Many of the victims were already having financial trouble. And on top of the unauthorized withdrawals, they allegedly received harassing telemarketing and debt collection calls.

The defendants also had a Philippines-based customer service center. When customers called, they were frequently offered refunds and $100 gasoline vouchers that they never received, according to the FTC.

While their victims struggled to recover from their financial troubles–made worse by these schemes–Mulrooney and Ogaga were living high on the hog. Mulrooney owns a 2012 Maserati GranTurismo; Ogaga owns a 2011 Rolls Royce Ghost and a 2006 Ferrari 430, according to court documents.

This is the FTC’s third recent case involving allegedly fraudulent online payday-loan-related operations.  In two previous cases, defendants American Credit Crunchers, LLC and Broadway Global Master Inc. allegedly tried to collect on payday loan debts that either didn’t exist or weren’t owed to them.

Now more tips. If you’re looking for a payday loan, Better Business Bureau has the following advice:

  • Beware of online lenders offering quick cash. Such lenders claim they are not bound by state and federal regulations and therefore, skirt many of the laws that protect consumers.
  • Pay off the loan quickly. A $15 fee isn’t too high if you pay it only once. Extending the loan period means paying multiple fees, making it more difficult to pay down on the original loan amount.
  • Do not pay a fee up front. Lenders asking for a fee before they provide the loan are not legitimate.
  • Be wary of lenders asking for a wire transfer. The Texas Attorney General’s Office said scammers will ask for this type of payment rather than allowing you to mail a check to avoid an additional charge of mail fraud.
  • Check the lender’s name closely. Scammers will also use a company name similar to that of a reputable lender. The AG’s office filed suit against a company calling itself City Mortgage, which had no affiliation with Citibank or CitiMortgage.
  • If it seems too good to be true, it is. Companies claiming to offer a low interest rate regardless of credit are not trustworthy, according to the AG’s office. The National Foundation for Credit Counseling or the Consumer Credit Counseling Service in your area can help you consolidate debt or get a loan despite poor credit history.
  • Check the company’s rating. Visit BBB.org to check out a company’s rating and view customer complaints before dealing with a lender. Remember, the threat of identity theft is high since all lenders require personal information. Unscrupulous companies will use that to their advantage.