Scammers Accused of Swindling Payday Loan Applicants
A federal court has temporarily shut down the defendants' operation, frozen their assets and appointed a receiver to take control of their businesses and its assets. The FTC's lawsuit seeks to halt the defendant's illegal practices, force them to surrender their ill-gotten profits and refund their victims.The defendants include Michael Bruce Moneymaker (also known as Bruce Moneymaker), Mike Smith and Michael Bruce Millerd, also doing business as Fortress Secured; Daniel De La Cruz; Belfort Capital Ventures, Inc.; Dynamic Online Solutions, LLC; HSC Labs, Inc.; Red Dust Studios, Inc.; and Seaside Ventures Trust and its trustee.
According to the FTC's complaint, Moneymaker, De La Cruz and their companies obtained personal information about consumers from websites that claimed to match consumers with payday lenders. The defendants then enrolled the consumers -- without their knowledge or consent -- in one or more worthless "continuity" programs.
Continuity programs charge consumers recurring fees until cancelled; the programs consumers were involuntarily enrolled in included upfront fees of up to $49.99 each, plus additional weekly or monthly recurring fees of up to $19.98.
The defendants ensnared their victims via "Terms and Conditions" pop-up boxes that appeared after consumers entered their personal information in websites soliciting payday loan applications. The pop-up boxes, which looked like part of the application, asked consumers to provide authorization but never mentioned the defendants or their continuity programs.
As a result, many consumers were tricked into providing the requested personal data, which included bank account information. Moneymaker and De La Cruz, the FTC charged, used the ill-gotten information to create and deposit "remotely created checks" to pay for the continuity programs.
Only when consumers checked their bank balances or were informed their accounts had been overdrawn by the fraudsters did they realize they'd been enrolled in these useless programs.
Typically, when consumers called customer service numbers to cancel or demand a refund, no one would answer, the line would go dead, or they'd be put on hold indefinitely.
Consumers who did mange to reach someone at the call center didn't fare much better, the FTC charged, since Moneymaker and De La Cruz instructed their employees to give as few refunds as possible. As a result, call center employees routinely refused refund requests, refunded only the most persistent consumers or promised refunds that never materialized.
Victims who were illegally enrolled in several of the programs -- whose names included "Freedom Subscription," "Illustrious Perks," "Select Platinum Credit" and "Kryptonite Credit" -- were also told they had to call separate numbers to discuss each program, even though the call center handled calls for all the useless programs.
Call center employees also told consumers they'd authorized the charges for the programs during their payday loan application, and they were being charged for third-party offers including free voicemail, free airline tickets and a $10,000 secured credit line.
The FTC charges that the defendants violated the FTC Act by:
- Obtaining consumers' bank account information and debiting their accounts without their consent.
- Falsely claiming consumer authorizations were part of their payday loan applications.
- Failing to clearly and conspicuously disclose that consumers would be charged for third-party trial offers automatically extended to them.
- Lying to consumers by claiming they weren't entitled to refunds because they'd agreed to enroll in and pay for the defendants' programs, as well as agreeing that refunds were only valid during an initial trial period.
- Promising consumers refunds they had no intention of honoring.
For more information from the FTC on free trials, click here.