The Federal Trade Commission has shut down the operator of a large network of online loan sites that promised to find people the loans with the lowest rates, but actually sold users’ data to third-parties, most of which weren’t even lenders.
The target of FTC’s ire is a company named Blue Global Media, LLC and its CEO, Christopher Kay, against which the FTC filed an official complaint last Monday, July 3.
According to the FTC, since 2012 Blue Global Media operated a network of 38 websites that promised users to match them with the best payday, personal, or auto loans using Blue Global Media’s proprietary technology.
Hoping to find loans with the smaller interest rate and friendlier terms, users entered a slew of personal details on Blue Global Media’s websites, such as names, email addresses, home addresses, phone numbers, Social Security numbers, financial and banking information, driver’s license, state ID numbers, income data, military status, home ownership info, and many other more.
Blue Global Media sold 98% of the user data to non-lenders
The FTC says that Blue Global Media collected in-depth data from over 15 million loan applications, but only 2% of these were sold to actual loan lenders, while the rest was sold to non-lenders, with complete disregard for user privacy or without obtaining the loan seeker’s permission.
In addition, the FTC says that Blue Global Media didn’t match loan applications based on loan rates or terms, and in most cases, it sold the loan application to the first lender that offered to fill it, to the detriment of the users who used their site.
Company agrees to shut down in settlement case
Two days later after the FTC filed its official complaint, both Blue Global Media and Kay agreed to a settlement. As per the settlement’s terms, the company agreed to a default judgment of $104,470,817, the sum they obtained from selling customer data to non-lenders.
Because neither Blue Global Media or Kay could pay the amount the FTC was asking, they also filed for a Chapter 7 bankruptcy, effectively agreeing to shut down all operations.
As per a Chapter 7 bankruptcy, the FTC will sell off any Blue Global Media assets it can get its hands on to cover a portion of the $104 million fine.