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Order Marks First Commission Action Against a Provider of “Payday Loans”

Order Marks First Commission Action Against a Provider of “Payday Loans”

The Federal Trade Commission today announced two proposed agreements settling costs that Consumer Money Markets, Inc. (CMM), Continental Direct Services, Inc. (CDS) and many people and organizations attached to the businesses violated the FTC Act, the Telemarketing product Sales Rule (TSR) as well as the Truth in Lending Act (TILA) by falsely representing that customers who paid an account charge of $149 to $169 would receive a personal line of credit of thousands, along side cash-advance privileges.

The truth is, right after paying the up-front cost customers discovered that they might just utilize the personal line of credit to purchase things from CMM’s catalog, and therefore the “cash-on-demand” supply amounted to nothing but high-interest “payday loans” – short-term loans of $20 to $40, with interest levels all the way to 360 per cent or even more each year.