The Federal Trade Commission (FTC) recently froze the assets of six short term loan companies after they allegedly obtained customers' bank account information and then charged them for services without their authorization, according to stock market analysis and commentary website FavStocks.
The FTC alleged that a group of companies run by Michael Bruce Moneymaker, Mike Smith and Michael Bruce Millerd - including Fortress Secured, Belfort Capital Ventures Incorporated, Dynamic Online Solutions LLC, HSC Labs Incorporated, Red Dust Studios Incorporated and Seaside Ventures Trust - buried monthly subscriptions agreements in Terms of Service rules that customers were required to accept in order to complete applications. Some of the programs were Freedom Subscription, Illustrious Perks, Select Platinum Credit and Kryptonite Credit, and the third-party offers included free voicemail, free airline tickets and a $10,000 secured credit line, according to personal finance news website WalletPop. After customers provided personal information such as their names, bank routing numbers and bank account numbers, they were automatically charged a $40 to $50 initial subscription fee, as well as subsequent weekly or monthly fees. The majority of subscribers had no idea that they had been signed up for the service until they checked their bank account histories, but were told by the companies that they were not entitled to a refund because they had agreed to subscribe. When they called companies' customer service numbers, the lines would typically disconnect or give repeated busy signals. In the event that a representative did answer, callers were often placed on hold indefinitely. The FTC alleges that call center representatives were instructed to offer as few refunds as possible, resulting in many consumers either being promised refunds that never materialized or simply being refused. Moneymaker and his associates were specifically charged with obtaining consumers' bank account information and withdrawing payments without informed consent, falsely representing that consumers' authorizations were part of their short term loan applications, failing to draw attention to the fact that consumers would automatically be charged for third-party trial offers, falsely telling consumers that they were not entitled to refunds and falsely promising refunds that were then not provided. The lawsuit, which was filed under seal on March 28, was recently unsealed, according to the Courthouse News Service. The FTC is seeking refunds for consumers as well as an injunction and damages for deceptive billing and violations of the FTC Act.