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From Banking and Finance Law Daily, April 21, 2016

Selling consumers’ loan applications without safeguards brings CFPB enforcement action

By Andrew A. Turner, J.D.

The Consumer Financial Protection Bureau has taken action against two co-founders of a company that allegedly resold loan applications containing sensitive personal data to lenders and data brokers without assessing the sources of those leads or the purchasers they sold to. CFPB complaints in federal court against Dmitry Fomichev and Davit Gasparyan contend that both had significant responsibility for establishing T3Leads’s policies and practices and, throughout their employment, had substantial control over the company’s operations. The CFPB filed a separate lawsuit against T3Leads and two other individuals in December 2015.

“T3Leads steered consumers toward bad deals with lenders it didn’t vet and with no regard for how the consumers’ information would be used,” said CFPB Director Richard Cordray. “This is a reminder to the middlemen who buy and sell consumer loan applications: if you engage in this type of conduct, you risk the consequences for harming people.”

The CFPB alleged that Gasparyan served as chief financial officer and chief marketing officer, while Fomichev served as chief executive officer and chief technology officer. Each, the CFPB alleged, helped direct the strategy and business practices of the company from its founding through mid-2014.

T3Leads, a lead aggregator, allegedly 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. The CFPB contends 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.

Companies: T3Leads

MainStory: TopStory CFPB EnforcementActions Privacy

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