KC payday lenders reach $54 million settlement over fake loans

A Kansas City-based payday lending operation is banned from offering more loans as part of a $54 million settlement announced Tuesday by the Federal Trade Commission.

Fourteen companies owned by Kansas City-area residents Timothy A. Coppinger and Frampton T. Rowland III were accused by the FTC of using online data to take out loans for people without their permission.

According to the FTC, when prospective borrowers entered personal information into third-party websites to look for loans, Coppinger and Rowland’s companies would use that information to access the borrowers’ bank accounts and deposit $200-$300 “loans” without their permission. The companies then withdrew up to $90 at a time as so-called finance charges, according to the FTC.

If borrowers contested the unauthorized transactions, the companies would misrepresent to the banks that the transactions were authorized by the customers.

In 2012, the companies issued $28 million in payday “loans” and withdrew more than $46.5 million from bank accounts, according to federal regulators.

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