One of the owners of a payday loan and collection operation agreed to settle Federal Trade Commission charges for his role in a scheme that illegally tried to garnish borrowers’ wages and used other illegal collection practices.
Mark S. Lofgren is banned from collecting debts through wage assignment. He also is permanently prohibited from misrepresenting facts to collect a debt; disclosing a debt to any third party; and contacting a consumer’s employer while trying to collect a debt - unless he is seeking location information or has a valid court order of garnishment.
The defendants, doing business as Ecash and GeteCash, offered loans to be repaid from borrowers’ upcoming paychecks, according to the FTC’s complaint. Online loan applicants checked a box indicating their agreement with loan terms, including an inconspicuous "wage assignment" clause that said that their wages would be garnished to cover delinquent loan payments. Then, using the name LoanPointe, the defendants attempted to collect on the offered payday loans.
Federal law allows federal agencies to require employers to garnish employees’ wages without a court order when the employees owe the government money. According to the complaint, in letters to employers that sought garnishment of their employees’ wages, GeteCash and LoanPointe tried to pass themselves off as having the same collection rights as the government.
The FTC’s complaint also alleges that GeteCash and LoanPointe falsely stated that consumers knew their pay would be garnished and had an opportunity to dispute the debt. In addition, GeteCash and LoanPointe allegedly violated the law when they told employers and co-workers about consumers’ debts without their consent.
Lofgren, as part of the settlement, is barred from violating the Credit Practices Rule and the Fair Debt Collection Practices Act, selling or otherwise benefitting from customers’ personal or financial information and failing to properly dispose of customer information.
The order imposes a $38,133 judgment that is suspended based on his inability pay. The full judgment will become due immediately if he is found to have misrepresented his financial condition.
The FTC dismissed Benjamin J. Lonsdale and James C. Endicott as defendants in the case. Litigation continues against Joe S. Strom, LoanPointe LLC and Eastbrook LLC, firms doing business as Ecash and GeteCash.