As if payday loans weren’t causing people enough financial trouble (they’re called predatory loans for a reason), the FTC sent reimbursement checks totaling nearly $ 3 million to consumers scammed by CWB Services, LLC. The FTC has sued CWB Services, LLC and other named defendants for capturing consumer information through lead generation systems and using that information for unauthorized loans or loans on deceptive terms.
CWB services collect “finance charges” every two weeks
Think about paying for your car, paying for your house, or the last personal loan you took out. When you make a payment, part goes to interest and part goes to principal. However, CWB Services has been accused by the FTC of depositing the loan money and withdrawing “finance charges” every two weeks. They did not use the money for the bogus loan.
Misleading loan terms
Some of the consumers have applied for payday loans. However, the complaint filed by the FTC alleged that CWB Services and other defendants had named violations of the FTC law which prohibits unfair or deceptive acts and practices affecting business. In paragraph 56 of the complaint, the FTC alleged that the defendants had distorted the terms of the payday loan. The defendants reportedly told consumers that they would only receive the actual loan amount (including finance charges). However, the FTC alleged that consumers paid significantly more than the value of the loans.
The FTC alleged that CWB Services and the named defendants violated federal closed credit law and failed to disclose in writing the terms associated with the loan.
CWB departments and named defendants neither admit nor ignore their actions
Under the stipulated order with the FTC, CWB Services and the other named defendants will neither admit nor deny their actions. However, they are prohibited from lending money in the future. They are also prohibited from participating in distorting what they do and how they do it. This includes, but is not limited to, the total costs, restrictions, limitations or terms of any future service. They are also required to receive written authorization for any pre-authorized wire transfer. The amount of the judgment against CWB Services and the named defendants was $ 21.8 million. Consumers affected by the payday loan scam will receive a reimbursement check averaging $ 40.