CFPB Takes Action Against Lead Aggregators for Online Trafficking of Personal Information
T3Leads and Lead Publisher Exposed Consumers to Harassment and Deceit
WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today took separate actions against a company and an individual that resold sensitive personal data to lenders and debt collectors, allegedly exposing millions of consumers to harassment and deceit. In a complaint filed in federal court, the CFPB alleged that T3Leads bought and sold personal information from payday and installment loan applications without properly vetting buyers and sellers. It also alleges that T3Leads’ owners unlawfully aided the company’s violations. In addition to monetary relief, the CFPB seeks to require T3Leads to clean up its business practices. In a separate matter, the CFPB took action against Eric V. Sancho, who operated a company called Lead Publisher that sold leads to fraudulent debt collectors without regard for how they would use the data. The CFPB ordered Sancho to disgorge $21,151 he made illegally and banned him from the financial products and consumer leads industries.
“These operators steered consumers toward bad deals and provided no protection from shady characters and unscrupulous lenders,” said CFPB Director Richard Cordray. “This is a reminder to the middlemen who traffic in personal information: if you ignore warning signs that those buying this data are violating the law, you risk the consequences for the harm you are doing to people.”
T3Leads, a lead aggregator, is based in Burbank, Calif., and owned by Grigor and Marina Demirchyan. Lead aggregators buy consumer information – called leads – from lead generators, websites that market payday and installment loans. Lead Publisher, owned and operated by Eric V. Sancho and based in Phoenix, Ariz., also bought and sold leads, which contain personal information such as consumers’ names, telephone numbers, home and email addresses, references, and employer information.
T3Leads’ Unfair and Abusive Trafficking in Personal Information
The CFPB alleges that T3Leads bought leads and sold them to payday or installment lenders and others with no regard for how the consumers’ information would be used or to the promises lead generators made to consumers. Buyers of leads from T3Leads include lenders tied to Indian tribes or based in foreign jurisdictions. These lenders often skirt state laws and deny the jurisdiction of U.S. courts. The CFPB alleges that T3Leads did not vet or monitor its lead buyers, exploited consumers’ lack of understanding of the risks, costs, and conditions of the loans applied for, and put consumer information at risk of being trafficked for illegal purposes. The CFPB alleges that T3Leads violated the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the Bureau alleges that T3Leads:
- Ignored false or misleading statements about lenders obtaining consumer applications: Consumers who applied for loans through T3Leads’ lead generators had no control over who received their application and had to trust T3Leads’ selection of lenders in its network. But those lead generators suggested that its lenders met certain standards, and often falsely claimed to match consumers with lenders that “follow the rules” or offer “reasonable” terms.
- Failed to vet or monitor purchasers: T3Leads failed to vet purchasers before adding them to its network or selling them leads, and did not require lenders to provide information about whether they complied with state laws.
- Steered consumers toward unfavorable loans: T3Leads’ process often steered consumers to lenders offering less favorable loan terms than otherwise available. In particular, consumers were likely to be connected to lenders that ignore state usury limits or claim immunity from state regulation and jurisdiction. These entities often charge higher interest rates than lenders that do comply with state laws, and they often paid the highest prices for leads from T3Leads.
Lead Publisher’s Reckless Sales to Illegal Actors
The CFPB found that from 2011 to 2014, Lead Publisher’s Sancho failed to vet his leads’ sources or buyers. He sold roughly three million leads to two related companies that used the information to harass and deceive consumers into paying alleged debts they did not actually owe. The CFPB found that Lead Publisher, through Eric Sancho, violated the Dodd-Frank Act. Specifically, the Bureau alleges that he:
- Sold millions of leads to companies that threatened, harassed, and defrauded consumers out of millions of dollars: Lead Publisher sold roughly three million consumer leads to related companies WNY Account Solutions Group, LLC and Universal Debt Solutions, LLC. The CFPB sued those companies in March, alleging that they harassed consumers to collect “phantom debts,” defrauding them out of millions of dollars. Leads purchased from Sancho were used to threaten and lie to consumers to collect debts they did not actually owe.
- Facilitated fraud and fake “legal actions”: Using personal information purchased from Lead Publisher, WNY threatened consumers with “financial restraining orders” – falsely claiming consumers had bounced checks so they could fraudulently collect debts. Lead Publisher never checked if WNY offered a legitimate product or service to consumers, and did not examine its policies or practices, its legal compliance, or whether it held appropriate licenses.
Under the Dodd-Frank Act, the CFPB can take action against institutions or individuals engaged in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws.
- The complaint against T3Leads and the Demirchyans seeks monetary relief, injunctive relief, and penalties. The Bureau’s complaint is not a finding or ruling that the company has actually violated the law.
- Lead Publisher is now out of business. Under the order issued today, owner Eric Sancho is banned permanently from the financial products and online consumer leads industries, and has to disgorge $21,151 he obtained illegally.
The complaint filed against T3Leads can be found here: https://files.consumerfinance.gov/f/201512_cfpb_complaint-v-d-and-d-marketing-inc-et-al.pdf
The consent order issued against Sancho can be found here: https://files.consumerfinance.gov/f/201512_cfpb_eric-v-sancho-consent-order.pdf
The Bureau’s complaint against T3Leads is not a finding or ruling that the defendant has actually violated the law.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.