FTC Wins Payday Loan $54M Settlement for Consumers

In early July, operators of several payday loan operations that allegedly extorted millions of dollars from consumers are no longer doing business.

The Federal Trade Commission (FTC) reports that Timothy A. Coppinger, Frampton T. Rowland III, and their companies have come to a $54 million payday loan settlement with the federal agency.

According to reports by USA Today, about 400,000 consumers were affected by this payday loan scheme; the FTC stated that the settlement fund will go toward reimbursing consumers for their losses stemming from these payday loans.

Payday loans (also known as installment loans and short term loans) are generally small loans issued at a high rate that are expected to be paid back in a short period of time, usually in two weeks when a borrower has received their next paycheck.

Recent payday loan litigation alleges that there are many unfair practices within the payday loan industry that aim to keep consumers in the cycle of debt while payday lenders profit.

FTC Payday Loan Allegations

The payday loan lawsuit against these operators and their companies, which include Sandpoint Capital, alleges they targeted online payday loan applicants and then deposited money into those applicants’ bank accounts without their consent.

Subsequently, the defending payday loan companies would withdraw reoccurring “finance” charges, though none of these payments would go toward paying the principal amount owed by the consumer.

Eventually, the court put a stop to Sandpoint Capital and other related payday loan schemes operated by Coppinger and Rowland and froze their assets during the course of the litigation.

In addition to Sandpoint Capital, other limited liability payday loan companies operated by Coppinger and Frampton that were involved in this lawsuit include:

• CWB Services
• Orion Services
• Basseterre Capital
• Namakan Capital
• Anasazi Services
• Anasazi Group
• Vandelier Group
• St. Armands Group
• Longboat Group
• Oread Group

The FTC’s payday loan lawsuit against the defending companies and operators claims they told consumers that they were obligated to pay for the unauthorized loans these consumers “agreed” to take out.

To support these payday loan claims, Sandpoint Capital and the other defending companies would send consumers fabricated loan applications or other documentation that “proved” the consumers had authorized these illegal payday loans.

Furthermore, these payday loan companies and operators allegedly misrepresented the cost of the installment loans, even to those consumers who wanted the loan and weren’t forced into the payday scheme.

Payday Loan Settlement Provides Relief for Consumers

According to the FTC’s allegations against Sandpoint Capital and other Coppinger and Frampton short term loan companies, the loan documents presented by the companies presented false figures for the loan’s finance charges, payment schedule, annual percentage rate, and the total number of payments. This allowed the payday loan scheme to continue, as the true cost of the loan was buried in the documents’ fine print.

Under the terms of the payday loan settlement, the defending companies and operators are prohibited from working in the consumer lending business, including anything involving collecting payments, selling debts, or making communications concerning loans.

Additionally, they are also banned from misrepresenting any goods and services as well as charging consumers via debiting and billing for payday loans or making electronic fund transfers to consumers’ accounts without their express consent.

Finally, the settlement will also erase any debt consumers allegedly owed to the payday loan companies and prohibits the defendants from reporting the supposed debts to any credit reporting agencies.