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.
The FTC alleged that CWB Services and named defendants violated federal law related to closed end credit and failing to disclose in writing the terms associated with the loan.
CWB Services & Named Defendants Do Not Admit or Deny Their Actions
Under the stipulated order entered into with the FTC, CWB Services and other named defendants will not admit or deny their actions. However, they are banned from lending money in the future. They are also banned from participating in misrepresenting what they do and how they do it. This includes, but isn’t limited to the total costs, restrictions, limitations, or conditions of any future services. They are also required to receive written authorized for any preauthorized electronic transfers. The judgement amount against CWB Services and named defendants was $21.8 million. Consumers affected by the payday loan scam will receive a refund check averaging $40.