We all heard of "payday loans" and seen all the commercials for them.
Payday loans are set up to help people who might need extra cash before their next payday. They are suppose to help people but instead it's a trap that leads people to more debt and sometimes, legal issues.
The Federal Trade Commission known as the acronym, FTC recently filed a major lawsuit against payday companies, also known as cash advance companies, and especially those who gave out several payday loans to unsuspecting customers.
According to the complaint, starting in 2012 Payday Support Center, LLC – also known as PSC Administrative, LLC – began using Internet, radio, and telemarketing to entice consumers into enrolling in their “financial hardship program” by claiming they could negotiate with lenders to reduce payments or eliminate debts.
Promotional advertisement for these payday loans included statements such as below,
“Are payday loans ruining your life? Do you have more payday loans than you’re able to pay back right now? If you have two or more payday cash advance loans, listen closely…”
“All you need is two or more payday loan cash advances to qualify. Even if you’re behind, in collections or have bad credit. We’ll even help you with your internet payday loans…”
During telemarketing calls, operators often told consumers they had been put through a “qualifications check” and were being allowed to participate in a special “financial hardship program.”
The FTC complaint describes the following as a typical telemarketing interaction from the company below:
“Telemarketer: We make sure that they were licensed to do business and we get the loans settled and paid off for you.
“Caller: Okay. So, you guys pay my loans for me or do I pay these people?
“Telemarketer: Now, you’ll make your payments through our company. The funds that you provide by going through the program will go towards settling and paying off your loan[s] (sic).”
When consumers enrolled in the program, the company would advise them to stop making direct payments to their lenders, and instead make payments through the debt relief company.
According to the FTC, consumers were then promised that their debt would be paid off within six months if they made bi-monthly payments between $98 and $160. In some cases, the company charged consumers an additional fee of $38 for their services. The companies also told consumers they could negotiate their interest free payment on the loans but in reality, the company provided little or no help to the consumers. Who then accumalated massive debt from their payday loans.
Named defendants in the suit include: PSC Administrative, LLC, formerly known as Payday Support Center, LLC; Coastal Acquisitions, LLC, doing business as Infinity Client Solutions; Jared Irby, individually and as an officer of PSC Administrative, LLC; and Richard Hughes, individually and as an officer of PSC Administrative, LLC.
By filing the complaint, the FTC is planning on closing down the payday loans illegal conducts and also, retrieve refunds for all parties involved.