A woman counts U.S. dollar bills in this file photo.© Beawiharta Beawiharta / Reuters
A federal judge shut down two online payday lending operations after U.S. regulators said they extracted more than $36-million from customers who never agreed to loans.
The operations bought personal data about people who were researching loans at other websites, deposited unsolicited money in their accounts and debited finance charges that exceeded the amount of the deposits, according to the Consumer Financial Protection Bureau and the Federal Trade Commission.
When some consumers tried to stop their banks from debiting the money, the companies produced fake loan documents testifying to the debt, said Jessica Rich, director of the FTC's bureau of consumer protection. The lenders made mostly unsolicited loans totalling $125.3-million while extracting $161.9-million from bank accounts, the regulators said.
"It is an incredibly brazen and deceptive scheme," Richard Cordray, director of the consumer bureau, said in a conference call with reporters today.
U.S. District Court Judge Dean Whipple in the Western District of Missouri issued a temporary restraining order against Richard F. Moseley Sr. Richard F. Moseley Jr.; and Christopher J. Randazzo after the consumer bureau filed a lawsuit seeking to shutter their company, the Hydra Group, and return money to consumers.
John Aisenbrey, a lawyer at Stinson Leonard Street in Kansas City who represents the defendants in that case, didn't respond to a request for comment.
Whipple took similar action against a group of companies controlled by Timothy A. Coppinger and Frampton T. Rowland III at the behest of the FTC.
Allegations Disputed Patrick McInerney, a lawyer for Coppinger at Dentons in Kansas City, said his client would "vigorously dispute the allegations." Phillip Greenfield, a lawyer for Rowland at Rouse Hendricks German May in Kansas City, said his client also disputes the allegations and "voluntarily ceased business operations months ago."
The agencies charge that the companies violated the Truth in Lending Act, which mandates proper disclosure of loan terms, and the Electronic Funds Transfer Act, which bars making direct debits a condition of a loan.