As if payday loans don’t get people into enough financial trouble (it’s referred to as predatory lending for a reason), the FTC mailed out refund checks totaling almost $3 million to consumers scammed by CWB Services, LLC. The FTC sued CWB Services, LLC and other named defendants over capturing consumer information through lead generating systems and using that information for unauthorized loans or loans with deceptive terms.
CWB Services Collected “Finance Charges” Biweekly
Think about your car payment, house payment, or last personal loan you took out. When you make a payment, part of it goes to interest and part of it goes to principal. However, CWB Services was accused by the FTC of depositing the loan money and withdrawing a “finance charges” every two weeks. They did not apply any of the money toward the fake loan.
Deceptive Loan Terms
Some of the consumers applied for payday loans. However, the complaint filed by the FTC alleged that CWB Services and other named defendants of violating the FTC Act which prohibits unfair or deceptive acts and practices that affect commerce. In paragraph 56 of the complaint, the FTC alleged that the defendants misrepresented the terms involved with the payday loan. The defendants allegedly represented to consumers that they would only collect the true amount of the loan (including finance charges). However, the FTC alleged that consumers paid in far more than what the loans were worth.