Payday Loan Company Forced To Pay $100,000
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UPDATED: Nov 16, 2012
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PLS Financial Services, a payday loan lender that operates over 300 retail lending stores, has settled a lawsuit filed against it by the Federal Trade Commission (FTC).
The FTC is charged with protecting consumers in America by monitoring for fraud, financial deception, and unfair business practices. The FTC filed suit against PLS Financial Services, but the company avoided a lengthy trial by settling for $101,500.
According to the settlement, PLS Financial violated federal law by throwing away sensitive consumer information. Much of this information could be personally indentifying, and thus posed a risk to consumers’ wellbeing. The information included social security numbers, employment information, loan applications, bank account information, credit reports, and other information that identity thieves seek out. This information was thrown away in dumpsters near several PLS Financial Services’ buildings.
The FTC regulates the trashing of consumer information by having a Disposal Rule that requires lenders take certain steps in protecting borrower or applicant information when it is thrown away.
On top of violating FTC rules, PLS Financial Services also violated the Gramm-Leach-Bliley Safeguards Rule and Privacy Rule. These rules require lenders—including payday loan lenders—to create and utilize safeguards that guard consumer information. Likewise, these two rules require that consumers receive privacy notices. Putting paperwork containing the personal financial information of borrowers and applicants into dumpsters is a far cry from maintaining safeguards that protect the identity of consumers.
PLS Financial Services was also charged by the FTC for violating the FTC ACT for lying to regulators by falsely claiming that it used protective measures to safeguard consumer information—which it clearly did not.
This lawsuit and settlement has been the third time that the FTC has caught a company violating the Disposal Rule.
PLS Group, the mother company of PLS Financial Services, operates two dozen subsidiaries, which in turn operate over 300 retail payday loan stores across nine states. Far from simply being payday loan companies, these businesses offer additional services in check cashing, car title lending, debit cards, and phone cards.
The settlement aims to have PLS Group pay for their mistakes over the next 20 years by having a third-party audit their court-ordered data security program. The FTC will also be monitoring the bookkeeping methods and practices of the payday loan lender in order to ensure ongoing compliance with regulation.