Operators of a Kansas City-area based payday lending scheme would be banned from offering loans under a settlement that also would wipe away outstanding consumer debts.
The Federal Trade Commission said the settlement, which was announced Tuesday and for which approval is pending, involves a dozen companies and owners Timothy Coppinger and Frampton Rowland. A $32 million judgment would be suspended upon the surrender of an unspecified amount of frozen assets — including bank accounts and business investments — and $275,000 in cash payments, according to FTC attorney Matthew Wilshire.
Continue Reading Below
The order also would extinguish any consumer debt that defendants are owed and bars them from reporting the debt to credit reporting agencies.
The FTC said the companies, which are based in Kansas City, Missouri, and the Kansas towns of Prairie Village and Mission, targeted payday loan seekers who had entered personal financial information into third-party websites that match borrowers and lenders. Money was deposited into the accounts of the loan seekers without their permission and then charges were repeatedly withdrawn without any of the payments going toward the principal of the purported loans, the FTC said.
The companies told the consumers they had agreed to the unauthorized loans, going so far as to show them fake loan applications, the FTC said, adding that if consumers closed their bank accounts to stop the unauthorized debits, the companies often sold the unauthorized loans and debt collectors harassed them.
The FTC said the defendants also misrepresented loans' costs, finance charges, annual percentage rate, payment schedule and total number of payments.
Some of Coppinger's businesses, including CWB Services, handled loan servicing for lenders operated by Coppinger and Rowland. Loan servicing tasks included making withdrawals and fake loan documentation, Wilshire said.
Phil Greenfield, an attorney for Rowland, said in an email to The Associated Press that his client had voluntarily ceased consumer lending before the FTC filed the case. He said there was "no evidence" that Rowland participated in or knew about any of Coppinger's "challenged lending practices."
He said Rowland accepted the FTC offer to settle the case so he could "move on with his life."
Coppinger doesn't have a listed number, and attorney Patrick McInerney said Coppinger didn't want to comment.