FTC Charges Defendants with Selling Fake Payday Loan Debt Portfolios

The Federal Trade Commission has charged a Kansas man and his companies with selling portfolios of fake payday loan debts that debt collectors used to get people to pay on debts they did not owe. At the FTC’s request, a federal court halted the operation pending litigation.

According to the FTC, Joel Jerome Tucker, SQ Capital LLC, JT Holdings Inc. and HPD LLC sold lists of fake loans supposedly made by a phony lender, “Castle Peak,” or by an online loan provider known as “500FastCash.” The listings had the social security and bank account numbers of people who supposedly owed money. Debt buyers and collection agencies subsequently used this information to persuade people that the debts were real and/or to get them to pay the fake debts.

The FTC alleges that the defendants listed loans the named lenders did not make, and falsely claimed that purported borrowers had failed to repay debts they never owed. It also alleges that the defendants did not have the authority to sell debts of the lenders they named. The complaint alleges that these practices provided the means for deceptive statements, and were unfair, in violation of the FTC Act.

To add credibility to the fake 500FastCash payday loans, Joel Tucker invoked the name of his brother, racecar driver and payday loan vendor Scott A Tucker. In 2012, the FTC brought an action against Scott Tucker and others engaged in payday lending under various names, including “500FastCash.” In October 2016, a federal court ruled that Scott Tucker must pay $1.3 billion for deceiving and illegally charging consumers undisclosed and inflated fees. In 2015, a co-defendant in that case, 500FastCash trademark owner Red Cedar Services Inc. agreed to pay $2.2 million and cancel consumer loans to settle FTC charges that it illegally charged consumers undisclosed and inflated fees.

The FTC previously brought actions against two collectors that used Joel Tucker’s fake loan portfolios: Delaware Solutions, whose defendants were banned from the debt collection business in a settlement with the FTC and the New York Attorney General’s office, and Stark Law LLC.

After this complaint was filed against Joel Tucker and his companies, the court granted the FTC’s request for a preliminary injunction that prohibits the defendants from selling fake debt. The FTC seeks to permanently end the unlawful practice.

The Commission vote authorizing the staff to file the complaint was 3-0. It was filed in the U.S. District Court for the District of Kansas.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs and subscribe to press releases for the latest FTC news and resources.