Continuing its focus on data brokers, the Federal Trade Commission filed a complaint in Arizona federal court against LeapLab for allegedly purchasing payday loan applications and then selling sensitive personal information to third parties it knew did not need such data.
The FTC acknowledged that although LeapLab sold some of its loan applications to actual payday lenders, by charging between $10 and $150 per application, 95 percent of its sales from 2006 to 2013 were for just $0.50 to non-online lenders that had no legitimate reason for buying the names, addresses, phone numbers, bank account numbers, and Social Security numbers.
These purchasers used the information to make unsolicited sales offers (via e-mail, text, or telephone), aggregated the data for resale, or, in the case of Ideal Financial Solutions (named in a separate action filed in 2013), used the information to withdraw money from consumers’ bank accounts without permission, the FTC alleged.
Over a four-year period, Ideal purchased information on at least 2.2 million consumers, the Commission said, and used the data to make unauthorized debits and charges totaling millions of dollars. The company then told consumers that they purchased financial management or counseling products at a payday loan Web site. According to the FTC, LeapLab provided the information for at least 16 percent of Ideal’s victims.
To read the complaint in FTC v. SiteSearch Corp., click here.
Why it matters: “This case shows that the illegitimate use of sensitive financial information causes real harm to consumers,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Defendants like those in this case harm consumers twice: first by facilitating the theft of their money and second by undermining consumers’ confidence about providing their personal information to legitimate lenders.” Data brokers have faced close scrutiny from both the Commission – including a staff report issued last June – as well as federal lawmakers.