CFPB_2tone_Horiz_RGB-e1382623205988Two people who founded a company that was in the business of reselling loan applications has found themselves in the crosshairs of the Consumer Financial Protection Bureau (CFPB.) It is alleged that these two co-founders were selling applications to lenders and data brokerages without assessing where the leads came from or the companies that they sold the personal consumer information to. The two complaints were filed against Dmitry Fomichev and Davit Gasparyan. These two founded and ran a company called T3Leads, which aggregated information from payday loans and installment loans, apparently without properly vetting sellers and/or buyers. The CFPB also filed a lawsuit against the company and two other people related to these cases back in late 2015.

Weighing in on these new lawsuits, the director of the CFPB Richard Cordray said, “T3Leads steered consumers toward bad deals with lenders it didn’t vet and with no regard for how the consumers’ information would be used. 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.”

T3Leads has its base of operations in Burbank California. The company is currently owned by Grigor and Marina Demichyan. Lead aggregators operate by purchasing consumer information (a.k.a. leads) from companies called lead generators. These lead generators often create websites that market different types of consumer loans. The leads the company acquired (and turned around to sell) contained personal information, like names, addresses, employment information, phone numbers and more.

Gasparyan and Fomichev co-founded the lead aggregation company back in 2005. According to the CFPB Gasparyan was the CEO and chief marketing officer. Fomichev, meanwhile, served in the dual roles of CEO and chief technology officer. Both of these folks, according to the CFPB, worked to create the business practices and strategies that the company used from the very beginning until the middle of 2014.

It looks like the CFPB has quite a laundry list of offenses that they are leveling against these two. The bureau states that the company purchase leads and then sold them with no thought as to promises that lead generators made to consumers or to how the consumer data would be used. Purchasers of leads from T3Leads included lenders that were often based in foreign countries or on Tribal lands. The CFPB says that these lenders sometimes deny U.S. Court jurisdictions and do what they can to get around state laws. The CFPB says that by not properly vetting the companies it purchase leads from that the company was exploiting consumers and that they put some information at risk of being used for illegal purposes. According to the CFPB, these actions put the company in violation of the Dodd Frank Wall Street Reform and Protection Act.

The CFPB alleges that the co-founders of T3Leads have violated Dodd Frank by ignoring false/misleading statements about lenders that obtained consumer data from them. People who got information from lead generators for T3Leads did not have any control over who would receive their loan applications. Additionally, the CFPB said that the company did not monitor or vet data purchasers. The CFPB stated that the company sold information with no regard as to whether or not the lenders purchasing the consumer data would comply with state laws.

The CFPB has been working toward cracking down on these types of operations for the past year or so. Those companies that operate by way of buying and selling consumer information need to be aware of laws and abide by them if they want to avoid the potential of the CFPB potentially taking action against their businesses. That’s something that the defendants in this case apparently did not consider a priority.

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