FTC Takes Action Against Deceptive Payday Loan Marketers: What Businesses Can Learn

In a recent action, the Federal Trade Commission (“FTC”) charged two men, Michael Bruce Moneymaker and Daniel De La Cruz, along with their companies, for unlawfully billing consumers without their consent. These deceptive practices, which primarily targeted individuals seeking payday loans, involved enrolling consumers in costly "continuity" programs without their knowledge or approval. The FTC has sought to halt these practices and secure refunds for the affected individuals. This case highlights critical lessons for businesses about the importance of transparency, consumer consent, and proper billing practices. According to the FTC's complaint, Moneymaker, De La Cruz, and their businesses obtained consumer personal information from websites designed to match consumers with payday lenders. Unbeknownst to the consumers, the businesses enrolled them in multiple programs that carried up-front costs of up to $49.99 and additional recurring charges of up to $19.98. These "continuity" programs billed consumers on an ongoing basis unless they took active steps to cancel. The defendants used deceptive tactics to enroll consumers in these programs. After submitting their information on payday loan sites, consumers were presented with a pop-up box labeled "Terms and Conditions," which seemed to be a part of the payday loan application process. In reality, this pop-up was a mechanism to enroll consumers in the defendants’ continuity programs. Many consumers unwittingly authorized these charges, believing they were part of the payday loan process. Once enrolled, the defendants accessed consumers' bank account details and withdrew money through "remotely created checks," a practice that allowed them to siphon funds without explicit consent. Consumers often only discovered the unauthorized charges when they checked their bank accounts or when they were overdrawn. Attempting to resolve the issue, many consumers encountered unresponsive customer service lines or were put on hold for extended periods. Even when they managed to speak with someone, they were often met with evasive tactics and false promises of refunds that never materialized.