According to the FTC's complaint, Matthew Patterson, Mark Benning, Jason Strober, and Swish Marketing, Inc., operated a number of websites advertising short-term, or "payday," loan matching services. The websites also included an online loan application form that fooled consumers into unwittingly ordering a debit card when they applied for an online loan.On many of the payday loan sites, submitting loan applications triggered four unrelated product offers, each displaying small "Yes" and "No" boxes. Although the "No" button was pre-checked for three of them, the "Yes" was pre-checked for a prepaid debit card offer, along with a very fine-print disclosure giving the marketers consent to debit the consumers' bank accounts.
Consumers who failed to notice the fine-print subterfuge and quickly clicked a prominent "Finish matching me with a payday loan provider!" button were automatically charged for the debit card.
Other websites run by the scammers touted the card as a "bonus" and only disclosed the fee in fine print below the "submit" button. As a result, the FTC says, consumers were illegally charged up to $54.95 each.
In August 2009, the FTC charged Swish Marketing and VirtualWorks LLC, the seller of the debit card, and their principals with deceptive business practices.
In April 2010, the FTC filed an amended complaint against the Swish Marketing defendants, accusing them of selling consumers' bank account information to VirtualWorks without permission. Strober and the VirtualWorks defendants previously settled the charges against them.
Under the latest settlements, Patterson and Benning will be barred from:
- Misleading consumers about any product or service, such as costs or billing methods.
- Claiming a product or service is free or a "bonus" without disclosing all terms and conditions.
- Charging consumers without first disclosing what billing information will be used, the amount to be paid, which account will be billed, and all terms and conditions.
- Failing to monitor marketing affiliates to make sure they comply with the order.
Both settlement orders against Paterson and Benning also include a $5.2 million fine. The penalty against Patterson will be suspended once he hands over $350,000, and pays another $450,000 in 10 annual installments. Benning's fine will be suspended when he surrenders proceeds from the sale of his home. If either Patterson or Benning lied about their finances, they'll immediately be liable for the full $5.2 million fine.