On May 22, 2020, the Federal Trade Commission announced that it had charged a payday lending enterprise with deceptively overcharging consumers millions of dollars and withdrawing money from their bank accounts without permission.

The FTC alleged that the defendants operate a massive payday-lending scheme that baits consumers with telemarketed loans that have a fixed number of principal-plus-interest payments but switches to unlimited finance fee-only payments after the consumer agrees.

The FTC obtained a temporary restraining order from a federal court stopping the operation and freezing the defendants’ assets. The U.S. District Court, District of Nevada entered the temporary restraining order on May 19, 2020.

According to the FTC, the 11 defendants used deceptive marketing tactics by means of websites and telemarketing to convince consumers that their loans would be repaid in a fixed number of payments. Instead, many consumers found that the defendants had applied their funds only to finance charges and continued to make regular finance charge-only withdrawals from their checking accounts long after the promised number of payments had been made.

The FTC also charged that the defendants failed to make required loan disclosures, made recurring withdrawals from consumers’ bank accounts without proper authorization and illegally used remotely created checks.

Andrew Smith, director of the FTC’s Bureau of Consumer Protection, noted, “Harvest Moon bled consumers dry, by promising a single payment payday loan, but then automatically debiting consumers’ bank accounts for finance charges every two weeks, in perpetuity.”

To read the complaint, click here. To read the temporary restraining order, click here.