FTC Slaps $1 million Fine on Internet Lender Over Collection and Loan Practices

A UK-based Internet payday lender will pay $1 million to settle charges brought by the state of Nevada and the Federal Trade Commission that it failed to disclose key loan terms and used unlawful debt collection tactics.

The FTC announced Monday that a network of companies operating under many names had been targeting U.S. citizens from the United Kingdom. Consumers were led to believe that the online payday loans were originated from and the lender was based in Nevada. The initial terms stated in marketing copy were straightforward: repay the loan by the next payday with a fee ranging from $35 to $80.

But authorities say that if a borrower missed the repayment, the companies employed venomous collection tactics. The FTC alleged that they falsely threatened consumers with arrest or imprisonment, falsely claimed that consumers were legally obligated to pay the debts, threatened to take legal action they could not take, repeatedly called consumers at work using abusive and profane language and improperly disclosed consumers’ purported debts to third parties.

The $1 million settlement will be split by the FTC and Nevada, with $970,125 going to the Feds and $29,875 to the state. The defendants must also change their collection and lending practices to comply with federal and state laws.

According to the FTC’s statements, the defendants also allegedly failed to make required written disclosures to consumers before consummating a consumer credit transaction, such as the amount financed, the annual percentage rate, payment schedule, total number of payments and any late payment fees in violation of the Truth in Lending Act (TILA) and Regulation Z.

The settling corporate defendants are Cash Today, Ltd., and The Heathmill Village, Ltd. (both registered in the United Kingdom); The Harris Holdings, Ltd. (registered in Guernsey, an island between England and France); Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Rovinge International, Inc.; and Lotus Leads, Inc. and First4Leads, Inc. (both now dissolved); each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd. and Big-Int, Ltd. The settling individual defendants are Aaron Gershfield and Ivor Gershfield.

The FTC dismissed from the case Jim Harris, who was named in the complaint. He operated a site in Nevada for the companies and he has voluntarily entered into a separate agreement with the State of Nevada that governs his future conduct under state law and provides that he will pay the state a civil penalty.