In new lawsuits seeking to hold the individuals behind a company that allegedly violated the Consumer Financial Protection Act of 2010 liable, the Consumer Financial Protection Bureau (CFPB) took action against the cofounders of a lead aggregator that allegedly bought and sold consumer loan applications without properly vetting lead generators and purchasers.

What happened

D and D Marketing, Inc., d/b/a T3Leads, is a California-based company that purchased consumer loan applications from lead generators containing data such as consumers' names, telephone numbers, home and e-mail addresses, references, and employer information.

Dmitry Fomichev and Davit Gasparyan cofounded the company in 2005, serving as the chief executive officers and chief technology officer as well as the chief financial officer and chief marketing officer, respectively. Both individuals helped direct the strategy and business practices of the company from its inception through mid-2014, the CFPB said.

After the company received the applications, it sold them to purchasers, including online small-dollar lenders, data managers, data brokers and remarketing companies, payday or installment lenders, without regard to the representations made by the lead generators to consumers or how the information of consumers would be used, the CFPB alleged. Some of T3Leads' purchasers included lenders that skirted state laws or denied the jurisdiction of United States courts, the Bureau said.

T3Leads—and Fomichev and Gasparyan—violated Dodd-Frank in three ways, the CFPB alleged in its California federal court complaint. First, the company ignored the statements made about lenders to the consumers who provided their information. Lead generators often falsely claimed to match consumers with lenders that offered "reasonable" terms or met certain criteria. Despite knowledge about these misleading statements—and that consumers were trusting T3Leads' selection of lenders—the company disregarded such statements, the Bureau alleged.

Second, the company failed to vet or monitor purchasers of its leads, neglecting to require lenders to verify that they complied with state laws, the CFPB said, and exposed consumers to the possibility that their personal data could be used for illegal purposes.

Finally, the Bureau alleged that T3Leads steered consumers toward unfavorable loans. Lenders that ignore state usury limits or claim immunity from state regulation typically paid higher prices for leads than lenders who followed the law, according to the Bureau, so T3Leads was more likely to sell leads to those entities, despite being aware of their unfavorable terms and conditions.

Fomichev and Gasparyan provided "substantial assistance" to T3Leads, the Bureau alleged, and had "significant responsibility" for establishing the company's policies and practices, with "substantial control" over the company's operations. The complaints against the individual defendants seek monetary and injunctive relief, as well as penalties.

To read the complaint in CFPB v. Fomichev, click here.

To read the complaint in CFPB v. Gasparyan, click here.

Why it matters

The CFPB filed a similar suit against T3Leads last December. Director Richard Cordray called the new suit "a reminder to the middlemen who buy and sell consumer loan applications: if you engage in this type of conduct, you risk the consequences for harming people."