Internet Payday Lender Fined $1 Million By FTC

    September 21, 2009

Nevada Attorney General Catherine Cortez Masto and the Federal Trade Commission (FTC) have announced a settlement has been reached against an international Internet payday lending operation that failed to disclose key loan terms and used illegal debt collection tactics against consumers.

The operation will pay $1 million to settle the State of Nevada and FTC charges for its misleading tactics.

The defendants operated from the United Kingdome and targeted consumers in the United States, who were misled into believing that the defendants operated in Nevada. According to the complaint filed by the FTC and Nevada in 2008, the defendants told consumers that the loans had to be repaid by their next payday with a fee ranging from $35 to $90, or the loans would be extended automatically for an extra fee debited from consumers’ bank accounts until the loans were repaid.

Catherine Cortez Masto, Attorney General, Nevada
Catherine Cortez Masto
Attorney General, Nevada

"We will investigate and prosecute these offshore lending operations," said Attorney General Masto. "These individuals need to know that we will not allow our citizens to be scammed and harassed via the Internet."

The FTC alleges that the defendants falsely threatened consumers with arrest or imprisonment, falsely claimed that consumers were legally obligated to pay the debts, threatened to take legal action they could not take, repeatedly called consumers at work using abusive and profane language, and improperly disclosed consumers debt to third parties.

The settlement order requires the defendants to pay $970,125 to the FTC and $29,875 to the State of Nevada. The order prohibits them from falsely claiming that consumers may be arrested or imprisoned for failing to pay debts, that they are legally obligated to pay the full amount of a purported debt, and that for nonpayment they are subject to lawsuit, seizure of property, or garnishment of wages.

The defendants also are barred from repeatedly calling consumers’ work places, using obscene or threatening language toward consumers and third parties, and disclosing the existence of consumers’ purported debts to third parties.

The settling corporate defendants are Cash Today, Ltd., and The Heathmill Village, Ltd. (both registered in the United Kingdom); The Harris Holdings, Ltd. (registered in Guernsey, an island between England and France); Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Rovinge International, Inc.; and Lotus Leads, Inc. and First4Leads, Inc. (both now dissolved); each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and Big-Int, Ltd. The settling individual defendants are Aaron Gershfield and Ivor Gershfield.