Internet Law

Data brokers sold consumer info to scammers who stole $7M, FTC says

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The Federal Trade Commission has filed a lawsuit against a Florida-based data broker operation. It contends two affiliated companies collected and sold consumer payday loan applications between 2009 and 2013 to a company that used the information for a $7 million fraud.

While defendants Sequoia One and Gen X Marketing Group did not themselves steal from consumers, they provided individuals’ names, social security numbers, phone numbers, dates of birth and account numbers via the payday loan applications to third parties, including fake Internet merchant Ideal Financial Solutions Inc., the FTC complaint says.

Ideal Financial allegedly bought the filled-out applications and used the information from them to charge some $7 million to those consumers’ accounts in unauthorized transactions, according to Courthouse News and McClatchy Newspapers.

Ideal Financial is not named as a defendant in the suit but was previously the target of an FTC enforcement action that resulted in a federal court shutdown order in 2013. The company was accused of charging consumers’ credit cards and bank accounts at least $43 million in 1.5 million unauthorized transactions, using information provided by the defendants and other data brokers.

“There’s a lot of debate going on about what’s the harm when you sell consumers’ data?” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, told a McClatchy reporter. “Well, one of the harms is that data brokers that aren’t legitimate can sell data to scam artists.”

The FTC complaint (PDF), which was filed last week in federal court in Nevada, seeks injunctive relief, damages and reimbursement of legal costs.

The articles don’t include any comment from the defendants.

Related coverage: “FTC report calls for Congress to rein in data brokers”

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