The Federal Trade Commission charged a payday loan operation with illegally trying to garnish borrowers’ wages and using other illegal collection practices. The FTC seeks to stop these practices and require the operators to surrender improperly collected money so it can be used for consumer refunds.

The defendants, which do business as Ecash and GeteCash, offer loans of up to $1,000 to be repaid from a borrower’s upcoming paycheck, according to the FTC’s complaint. They require online loan applicants to check a box indicating they agree with terms of the loan, including a statement consumers often do not see - that their wages will be garnished to cover delinquent loan payments. The statement allegedly attempts to circumvent federal requirements, including a debtor’s right to revoke a garnishment agreement, according to the FTC's complaint.

The list of defendants include Eastbrook LLC, d/b/a Ecash and GeteCash; LoanPointe LLC; Joe S. Strom; Benjamin J. Lonsdale; James C. Endicott; and Mark S. Lofgren. Eastbrook, LoanPointe and Strom have agreed to a preliminary injunction barring them from further unlawful practices.

U.S. 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, GeteCash tries to pass itself off as having the same collection rights as the government.

The FTC’s complaint also alleges that GeteCash falsely stated that consumers knew their pay would be garnished and had an opportunity to dispute the debt. GeteCash allegedly also violated the law when it told employers and co-workers about consumers’ debt without their consent.

The FTC alleges that, in carrying out their scheme, the operators violated the FTC Act, the Fair Debt Collection Practices Act and the Credit Practices Rule.

According to FTC officials, the Financial Management Service of the U.S. Department of the Treasury and the Idaho Department of Finance assisted in the investigation. The defendants could not be reached for comment this morning. FTC officials noted that a complaint is filed when there is a “reason to believe” the law has been or is being violated. The complaint is not a finding or ruling that the defendants have actually violated the law.

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