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Prevent Sharing of Data with Scammers


“Consumer data brokers” sell personal identity information for a fee. For instance, these operators extract data from applications for cash advances on expected payday receipts and then resell this information. Consumers sign forms that authorize the payday advancers – scammers – to pull money out of personal bank accounts for a fee.  That is a lucrative business because the scammers earn not only interest payments for loans that may generate over 40% interest charges, but also realize incomes from the resale of valuable personal information. In fraudulent cases a data broker will take payday loan applications of financially strapped consumers and then offers it to information marketers who can then withdraw millions of dollars from consumers’ accounts without authorization.

Payday loan websites are known as publishers. They offer to help consumers obtain payday loans by asking consumers to fill sensitive financial information to evaluate their loan applications and transfer funds to their bank accounts if the loan is approved. Such applications contain the consumer’s name, address, phone number, employer, Social Security number, and bank account number, including the bank routing number. Loan applications are then sold to online lenders, who can pay between $10 and $150 per lead. Raw personal information is also marketed to third parties who are not online lenders but use this data for other scams such as unsolicited sales or for unauthorized charges for products that the consumers never purchased.

Executive Guidance

Illegitimate use of sensitive financial information will cause damage to consumers, even if the data is passed through second or third parties. Such cases are usually brought before the Federal Trade Commission’s Bureau of Consumer Protection. The originators of the data will be held to be culpable if they have not applied diligence in verifying the legitimacy of the users of the personal information that was originated in their operations. 

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