Ask any gardener and they’ll tell you it’s a fool’s errand to lop weeds off at the surface. You also have to target the root system that allows them to propagate in the first place. That’s one of the messages to take from a judgment in the FTC’s case against Ideal Financial Solutions, Inc., and previous actions against data brokers and others who lent their green thumbs to Ideal’s large-scale consumer scam.
Nevada-based Ideal Financial Solutions acquired massive quantities of confidential consumer information – Social Security numbers, account numbers, and the like – and used it to make unauthorized withdrawals from consumers’ bank accounts.
How did they get their hands on such sensitive stuff? It turns out many of the consumers had applied for payday loans online. The personal data they turned over in the hope of getting a loan was compiled by purported loan sites and data brokers who – without batting an eye, it appears – sold it to Ideal Financial Solutions.
It’s hard to imagine things could get worse, but they did. Ideal Financial Solutions set up a sudoku-like puzzle of shell corporations and fake business names that made it even harder for consumers to figure out who was pilfering their already-depleted accounts.
The FTC sued Ideal Financial Solutions in 2013. The just-announced order imposes a $43 million judgment against the company, its subsidiaries, and four defendants, and an additional $36 million judgment against one of the ringleaders. That follows a $25 million partially suspended judgment entered in 2014 against two others involved in the operation. That order required one of them to liquidate his assets and turn them over to the FTC.
Put it all together and the orders suggest it’s a good time for all seven defendants to consider a new line of work. They’re all prohibited from collecting or disclosing account numbers except for transactions specifically authorized by the consumer. The most recent judgment also bans three ringleaders — Jared Mosher, Steven Sunyich, and Christopher Sunyich — from the marketing, sale, and handling of any credit-related products or services.
What about the companies that sold the data to Ideal Financial Solutions in the first place? The FTC has already announced settlements with Sitesearch Corporation (also known as LeapLab), Gen X Marketing Group, and Sequoia One.
What can other companies conclude from this announcement? First, the FTC isn’t fooled by mounds of mulch. We’ll till the soil necessary to unearth exactly what’s going on. Complicated corporate structures and evasive tactics won’t deter us from protecting consumers. Second, when evaluating liability, the FTC looks at the entire ecosystem of deception. Operations like Ideal Financial Solutions’s can’t germinate without the cooperation of information sellers. Therefore, it’s unwise for data brokers to get down in the dirt by selling sensitive information without a closer examination of how it will be used.
[Note: Edited August 26, 2016, to specify that theNevada-based company name is Ideal Financial Solutions]