FTC Charges Payday Broker LeapLab & Ideal Financial with Theft of Millions from Consumers’ Accounts

Post from the Federal Trade Commission:

FTC Charges Data Broker with Facilitating the Theft of Millions of Dollars from Consumers’ Accounts Company Sold Personal Financial Information to Scammers.

A data broker operation sold the sensitive personal information of hundreds of thousands of consumers – including Social Security and bank account numbers – to scammers who allegedly debited millions from their accounts, the Federal Trade Commission charged in a complaint filed today.

According to the FTC’s complaint, data broker LeapLab bought payday loan applications of financially strapped consumers, and then sold that information to marketers whom it knew had no legitimate need for it. At least one of those marketers, Ideal Financial Solutions – a defendant in another FTC case – allegedly used the information to withdraw millions of dollars from consumers’ accounts without their authorization.

“This case shows that the illegitimate use of sensitive financial information causes real harm to consumers,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “Defendants like those in this case harm consumers twice: first by facilitating the theft of their money and second by undermining consumers’ confidence about providing their personal information to legitimate lenders.”

The defendants collected hundreds of thousands of payday loan applications from payday loan websites known as publishers. Publishers typically offer to help consumers obtain payday loans. To do so, they ask for consumers’ sensitive financial information to evaluate their loan applications and transfer funds to their bank accounts if the loan is approved. These applications, including those bought and sold by LeapLab, contained the consumer’s name, address, phone number, employer, Social Security number, and bank account number, including the bank routing number.

The defendants sold approximately five percent of these loan applications to online lenders, who paid them between $10 and $150 per lead. According to the FTC’s complaint, however, the defendants sold the remaining 95 percent for approximately $0.50 each to third parties who were not online lenders and had no legitimate need for this financial information.

The Commission’s complaint alleges that these non-lender third parties included: marketers that made unsolicited sales offers to consumers via email, text message, or telephone call; data brokers that aggregated and then resold consumer information; and phony internet merchants like Ideal Financial Solutions. According to the FTC’s complaint, the defendants had reason to believe these marketers had no legitimate need for the sensitive information they were selling.

In the FTC’s case against Ideal Financial Solutions, between 2009 and 2013, Ideal Financial allegedly purchased information on at least 2.2 million consumers from data brokers and used it to make millions of dollars in unauthorized debits and charges for purported financial products that the consumers never purchased. LeapLab provided account information for at least 16 percent these victims.

The complaint notes that LeapLab hired a key executive from Ideal Financial as its own Chief Marketing Officer and then knew that Ideal used the information purchased from it to make unauthorized debits. Yet, the complaint alleges, the defendants continued to sell such information to Ideal.

The defendants in the case, Sitesearch Corp., LeapLab LLC; Leads Company LLC; and John Ayers, are alleged to have violated the FTC Act’s prohibition on unfair practices.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Arizona, Phoenix Division.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Contact Information
Jay Mayfield
Office of Public Affairs

James Kohm
Bureau of Consumer Protection

Original FTC Filing

FTC v. Sitesearch Corporation, Doing Business As LeapLab


California Car Title Loans

How-Start-Car-Title-Pawn-BusinessThis car title loan advisory was issued by The California Department of Business Oversight

Exercise caution before borrowing money through an automobile title loan.

These loans require you to put up as collateral the ownership of your car. If you miss payments or default on the auto title loan, the lender can take your vehicle.

Tips for consumers considering an auto title loan:

  • Borrow only as much money as you can afford to fully repay when the payment is due, which may be less than the amount you may be eligible to receive.
  • You have the right to full disclosure in your contract of all interest charges, the annual percentage rate (APR) of the loan and all fees. The final contract must be in the language in which you negotiated it.
  • Before you take out a loan, read the contract thoroughly and be sure you understand all the terms. Once the loan agreement is signed, you are legally responsible to fulfill the obligations in the contract.
  • Be aware some lenders use remote engine shutdown devices that allow them to turn off your car if you don’t make payments. Some of these devices have GPS tracking capability.
  • Although these loans are quick and easy to obtain, you pay higher prices for the convenience.
  • ABOVE ALL, CONSIDER AVAILABLE ALTERNATIVES. Examples include asking your employer for an advance on your next paycheck; finding out if your bank or credit union provides short-term credit products; asking creditors for more time to pay your bills; asking for a loan from a relative or friend.

Auto title loans typically are advertised as short-term loans for people who need money quickly but may not have access to more conventional loans, possibly due to marginal credit scores. Few assets are more important to Californians’ financial security than their cars.

Borrowers who use their auto titles as loan collateral are risking that asset. That’s why we strongly urge consumers to exercise great care before taking out an auto title loan, and to try other options first. The amount of these loans typically is less than what the car is worth.


Current state law does not limit interest rates for consumer loans of $2,500 or more. In 2013,virtually 100 percent (99.99 %) of auto title loans equaled or exceeded that threshold. The annualized interest rate on the vast majority of these loans ranged from 70% to 100% and higher.

Even if you don’t have the protection of interest rate limits, the law requires lenders to deal with you fairly and honestly. That means they must fully inform you about the interest you will pay.

Carefully review the terms of the loan BEFORE you sign a contract!

Always check with the Department of Business Oversight on a company’s license BEFORE entering into an agreement for an auto title loan. 1-866-275-2677

Here’s a link to the original Advisory.


Operation Choke Point: Banks Threatened by FDIC to Kill Payday Loan Industry

Federal Deposit Insurance Corporation’s Involvement in “Operation Choke Point” Staff Report, 113th Congress, December 8, 2014

U.S. House of Representatives, Committee on Oversight and Government Reform, Darrell Issa (CA-49), Chairman

Documents produced to the Committee reveal that senior policymakers in FDIC headquarters oppose payday lending on personal grounds, and attempted to use FDIC’s supervisory authority to prohibit the practice. In emails from February 2013, the Director of FDIC’s Atlanta Region noted he was “pleased we are getting banks out of ach (payday, bad practices, etc). Another bank is gripping [sic] . . . but we are doing good things for them!” Mark Pearce, the Director of FDIC’s Division of Depositor and Consumer Protection, expressed agreement with the sentiment, and noted concern over “failure to be proactive” on the issue.”

Key Findings:

  • FDIC’s explicitly intended its list of “high-risk merchants” to influence banks’ business decisions. FDIC policymakers debated ways to ensure that bank officials saw the list and “get the message.”
  • For example, the committee obtained a jarring account of a meeting between a senior FDIC regulator and a banker contemplating serving a payday lending client. The official told the banker, “I don’t like this product, and I don’t believe it has any place in our financial system. Your decision to move forward will result in an immediate unplanned audit of your entire bank.”
  • “… insisted that Chairman Gruenberg’s letters to Congress and talking points always mention pornography when discussing payday lending.”
  • Documents produced to the Committee reveal that senior FDIC policymakers oppose payday lending on personal grounds, and attempted to use FDIC’s supervisory authority to prohibit the practice. Personal animus towards payday lending is apparent throughout the documents produced to the Committee. Emails reveal that FDIC’s senior-most bank examiners “literally cannot stand payday,” and effectively ordered banks to terminate all relationships with the industry.
  • FDIC Field-level Examiners Ordered Banks to Cease Relationships With Payday Lenders.
  • “In a particularly egregious example, a senior official in the Division of Depositor and Consumer Protection insisted that FDIC Chairman Martin Gruenberg’s letters to Congress and talking points always mention pornography when discussing payday lenders and other industries, in an effort to convey a “good picture regarding the unsavory nature of the businesses at issue.”

Payday Loan Operation Choke Point

Payday Loan Operation Choke Point
Additional documents confirm Director Pearce’s opposition to payday lending, and determination to deploy FDIC’s supervisory power to prohibit or discourage the practice. In an email dated February 22, 2013, a Senior Counsel in the Legal Division’s Consumer Enforcement Unit informed an Assistant General Counsel there is top-level interest in stopping payday lending. The email describes how Director Pearce is interested “in trying to find a way to stop our banks from facilitating payday lending.” The Senior Counsel even describes concern with this approach, noting that other officials cautioned that “…unless we can show fraud or other misconduct by the payday lenders, we will not be able to hold the bank responsible.
Payday Loan Operation Choke Point
On March 8, 2013, the Senior Counsel wrote two FDIC attorneys within the Legal Division and asked about ways the FDIC could “get at payday lending.” The email explains that Consumer Enforcement Unit received a request from Division of Consumer and Depositor Protection to look into “what avenues are available to the FDIC to take action against banks that facilitate payday lending”:

Payday Loan Operation Choke Point
Personal animus towards payday lending is apparent throughout documents produced to the Committee. In one egregious example, the DCP’s Deputy Director for Policy & Research insisted that Chairman Gruenberg’s letters to Congress and talking points always mention pornography when discussing payday lending, in an effort to convey a “good picture regarding the unsavory nature of the businesses at issue.” The email, sent by a Counsel in the Legal Division, outlines a meeting that occurred with the Deputy Director:

Payday Loan Operation Choke Point
“It appears senior officials recognized the inherent impropriety of FDIC’s policy. In an email to DCP Director Mark Pearce, the FDIC spokesman described the basis for congressional oversight of the issue. The spokesman noted that “some of the pushback from the Hill is that it is not up to the FDIC decide what is moral and immoral, but rather what type of lending is legal”:

“The spokesman continues by stating that the FDIC has denied that they are forcing banks to end relationships with payday lenders. Documents obtained by the Committee prove this statement is false. As late as March 2013, FDIC officials were “looking into avenues by which the FDIC can potentially prevent our banks from facilitating payday lending.” Ultimately, senior officials at FDIC headquarters were successful in choking-out payday lenders’ access to the banking system. As of June 2014, over 80 banks have terminated business relationships with payday lenders as a result of FDIC targeting.”

“FDIC Field-level Examiners Ordered Banks to Cease Relationships With Payday Lenders.”

“Documents produced to the Committee confirm that senior officials are aware that FDIC examiners are injecting personal value judgments into the examination process. In an email to DCP Director Mark Pearce concerning agency policy with respect to payday lending, a DCP Deputy Director observes, “I may have to confront the issue of overzealous examiners (immoral issue). I would do so by making clear that it is not fdic [sic] policy to pass moral judgment on specific products.”

“Documents produced to the Committee justify these concerns: internal emails reveal that FDIC examiners were actively engaging in measures to prohibit or discourage relationships with payday lenders. In response to request for guidance on payday lending from the president of an unnamed bank, an FDIC Field Supervisor in the Atlanta Region wrote, “Even under the best circumstances, if this venture is undertaken with the proper controls and strategies to try to mitigate risks, since your institution will be linked to an organization providing payday services, your reputation could suffer.”

“In a far more glaring abuse of the examination process, a senior FDIC official effectively ordered a bank to terminate all relationships with payday lenders. On February 15, 2013, the Director of the Chicago Region wrote to a bank’s Board of Directors and informed them the FDIC has found “that activities related to payday lending are unacceptable for an insured depository institution.”

There is evidence examiners’ campaign against payday lending even extended to threats. At a hearing before the Subcommittee on Regulatory Reform, Commercial and Antitrust Law of the House Judiciary Committee, Chairman Bob Goodlatte revealed that senior FDIC regulators went as far as threatening a banker with an immediate audit unless the bank severed all relationships with payday lenders. Chairman Goodlatte explained in his opening statement:
For example, the committee obtained a jarring account of a meeting between a senior FDIC regulator and a banker contemplating serving a payday lending client. The official told the banker, “I don’t like this product, and I don’t believe it has any place in our financial system. Your decision to move forward will result in an immediate unplanned audit of your entire bank.”

“VI. Conclusion

The practical impact of Operation Choke Point is incontrovertible: legal and legitimate businesses are being choked off from the financial system. Confidential briefing documents produced to the Committee reveal that senior DOJ officials informed the Attorney General himself that, as a consequence of Operation Choke Point, banks are “exiting” lines of business deemed “high-risk” by federal regulators.

The experience of firearms and ammunitions dealers – one of the most heavily regulated businesses in the United States – is a testament to the destructive and unacceptable impact of Operation Choke Point. TomKat Ammunition, a small business selling ammunition in the state of Maryland, holds a Type 06 Federal Firearms License from the Bureau of Alcohol, Tobacco, Firearms and Explosives, two Maryland State Licenses for Manufacturing and Dealing in Explosives, and a local business license.80 Notwithstanding the extraordinary complexity of this regulatory regime, over the past year TomKat Ammunition has been systemically denied access to the financial system. One bank refused to provide payment processing services due to their “industry.” A large online payment processor informed TomKat that they “could not offer that service due to [their] line of work.” Another credit card processor stated it would no longer allow businesses to process gun or ammunition purchases.

Media accounts record similar experiences. In South Carolina, Inman Gun and Pawn’s longstanding checking accounts were terminated after the company was deemed a “prohibited business type.”In Wisconsin, Hawkins Guns LLC opened an account at a local credit union. The credit union terminated the account the very next day, informing the company that “they do not service companies that deal in guns.” In all three of these cases, the financial institutions and payment processors made no reference to the merchants’ creditworthiness, individual risk profile, or due diligence findings. The sole basis for the terminations is their participation in an industry deemed “high risk” by federal regulators.

Recognizing the irreparable harm to legal and legitimate industries, even fellow regulators have taken the extraordinary step of criticizing the impacts of Operation Choke Point. In a major speech at a joint conference of the American Bar Association and the American Bankers Association on November 10, 2014, David Cohen, the Under Secretary for Terrorism and Financial Intelligence at the Treasury Department, warned of the dangers of “de-risking.” Mr. Cohen explained that de-risking occurs when a financial institution terminates or restricts business relationships simply to avoid perceived regulatory risk, rather than in response to an assessment of the actual risk of illicit activity.84 The Under Secretary went as far as to characterize de-risking as “the antithesis of an appropriate risk-based approach,” warning that the practice can “undermine financial inclusion, financial transparency and financial activity, with associated political, regulatory, economic and social consequences.”

At a minimum, Operation Choke Point is little more than government-mandated de-risking. FDIC, in cooperation with the Justice Department, made sure banks understood – or in their own language, “got the message” – that maintaining relationships with certain disfavored business lines would incur enormous regulatory risk.86 The effect of this policy has been to deny countless legal and legitimate merchants access to the financial system and deprive them of their very ability to exist. Accordingly, Operation Choke Point violates the most fundamental principles of the rule of law and accountable, transparent government.”

Read the entire report, issued by Federal Deposit Insurance Corporation’s Involvement in “Operation Choke Point” here.