The FTC has sued to stop a debt relief operation aimed at targeting consumers with unpaid payday loans or other cash advances, saying the debt relief companies could help those consumers resolve their debts but then providing little to none of the financial relief they promised. As a result of the debt relief companies’ actions, many consumers stopped making payments to the original lenders and found themselves in even deeper financial trouble, having paid hundreds of dollars in fees for no benefit.
According to the FTC’s complaint, Payday Support Center, LLC, and other related parties, induced consumers into enrolling in their “financial hardship program” by promising that they would negotiate with the payday lenders to reduce the consumers payments and eliminate their debt. Payday Support Center and others also advised consumers to stop making payments to their original lenders, and instead make payments to the defendants instead.
Payday Support Center used catch phrases such as:
- “Are payday loans ruining your life? Do you have more payday loans than you’re able to pay back right now? If you have two or more payday cash advance loans, listen closely…”
- “All you need is two or more payday loan cash advances to qualify. Even if you’re behind, in collections or have bad credit. We’ll even help you with your Internet payday loans…”
The FTC alleges that when consumers contacted Payday Support Center, they were told they had gone through a “qualifications check,” and the consumers were qualified to enroll in the “financial hardship program.” As part of the program, Payday Support Center then promised to “get rid of,” “pay off,” or “tale care of” all the consumers’ payday loan debts. Also as a part of their scheme, Payday Support Center would tell consumers that they would negotiate an “interest free” payment on the consumers’ loans, falsely implying that the debts would be paid off, free of all interest and fees. The defendants required consumers to make bi-weekly payments to them, typically between $98 and $160.
However, in reality, the FTC alleges the defendants did not provide the debt relief services they promised, and left many consumers owing more than before they contacted Payday Support Center. While the defendants sent “validation” form letters to some lenders, the lenders typically ignored these letters and continued their collection efforts against the consumers. Based on this conduct, the FTC has charged the defendants with violating the FTC Act, which prohibits deceptive acts and practices, and the agency’s Telemarketing Sales Rule, which prohibits abusive and deceptive telemarketing practices.
The FTC’s suit against Payday Support Center comes after a recent record $21 million settlement with an online payday lending company owned by racecar driver, Scott Tucker. It appears that payday loans, and now their repayment, are continuing to draw the ire of the FTC. These companies have promised one thing, whether it be reduced loan costs or complete debt relief, but have failed to provide those services. As a result, payday loans and their repayments have “ruined the lives” of companies like Payday Support Center and others.