FTC Halts Deceptive Payday Lender That Took Millions From Consumers’ Accounts Without Authorization

The Federal Trade Commission has charged a payday lending enterprise with deceptively overcharging consumers millions of dollars and withdrawing money repeatedly from consumers’ bank accounts without their permission. A federal court has entered a temporary restraining order halting the operation and freezing the defendants’ assets, at the FTC’s request.

According to the FTC, the 11 defendants, through Internet websites and telemarketing, and operating under the names Harvest Moon Financial, Gentle Breeze Online, and Green Stream Lending, used deceptive marketing tactics to convince consumers that their loans would be repaid in a fixed number of payments. In fact, in many instances, the FTC alleges, consumers found that long after the promised number of payments had been made, the defendants had applied their funds to finance charges only and were continuing to make regular finance-charge only withdrawals from their checking accounts.

In addition, the FTC charges that the defendants failed to make required loan disclosures, made recurring withdrawals from consumers’ bank accounts without proper authorization, and illegally used remotely created checks.

“Harvest Moon bled consumers dry, by promising a single payment payday loan, but then automatically debiting consumers’ bank accounts for finance charges every two weeks, in perpetuity,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection.

The FTC charges the defendants with violating the FTC Act, the Telemarketing Sales Rule, the Truth in Lending Act and Regulation Z, and the Electronic Funds Transfer Act and Regulation E. The defendants named in the case are: Lead Express, Inc.; Camel Coins, Inc.; Sea Mirror, Inc,; Naito Corp.; Kotobuki Marketing, Inc.; Ebisu Marketing, Inc.; Hotei Marketing, Inc.; Daikoku Marketing, Inc.; La Posta Tribal Lending Enterprise; Takehisa Naito; and Keishi Ikeda.

The Commission vote authorizing the staff to file the complaint was 5-0. The U.S. District Court for the District of Nevada entered the temporary restraining order on May 19, 2020.

The FTC has information for consumers about payday loans, including alternative options and information for military consumers.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.