There are a lot of people who need to borrow money quickly but don’t know where to go for a loan. So they go online, where there are plenty of shady operators promising to connect loan applicants with lenders. What the borrower doesn’t know is that these lead generators may also be selling their personal information with third parties who have nothing to do with that loan.
This week, the Federal Trade Commission reached a settlement with Blue Global Media, a lead generator the FTC had accused of earning millions of dollars by misleading potential borrowers on its ability to connect them with low-rate lenders.
According to the FTC complaint [PDF], since 2009 Blue Global Media, along with CEO Christopher Kay, has operated dozens of websites — under names such as 100dayloans.com, 1houradvance.com, 1hourdirect.com, 1hourlend.com — that collected customers’ personal information based on the false promise of connecting them with payday loan and auto loan issuers.
The sites often included pitches that made it seem as if customers would always be approved for a loan. For example, eloanspersonal.com stated:
“Get Approved, Sign Your Loan
With four out of every five applications approved, you have an excellent chance of qualifying for a loan — regardless of your credit history! Once you’re approved, an electronic signature is all it takes to complete the loan process. It’s really that easy.”
The company promised customers that it would collect their information and then connect them with “trusted lending partners” in order to find the best loan available. The FTC claims this very rarely happened.
In fact, the complaint alleges that of the 15 million loan applications filled out by would-be borrowers, no more than 2% were actually sold to lenders. Of these applications, the FTC claims that Blue Global Media did not know if any, or how many, of those applications were approved for, or resulted in, a loan to the applicant.
As for the remaining applications, about 26% were sold to non-lenders and the remaining 72% were not sold at all.
To make matters worse, the FTC complaint alleges that Blue Global Media told customers that it would protect and secure their sensitive information, including Social Security numbers and bank account numbers.
However, the FTC claims that the company would instead sell customers’ information as “leads” to the first company willing to pay for the information, without regard for how the information would be used or whether it would remain secure.
When individuals complained that their information was being misused, Kay and his company did not investigate or take preventative action, the FTC alleges.
As part of the settlement, the FTC levied a $104 million judgment against Blue Global. However, based on the company’s inability to pay, the judgment is suspended.
In addition to the suspended judgment, Blue Global is prohibited from misrepresenting that they can assist in providing loans on favorable rates and terms, that they will protect and secure personal information collected from consumers, and the types of businesses with which they share consumers’ personal information.