Online Trading Academy Customers In Line For Debt Forgiveness

It's the second shoe to drop in the FTC's OTA probe

James R. Hood
James R. Hood

A large group of Online Trading Academy customers will have their debts erased under a proposed settlement with the Federal Trade Commission.

It's the second shoe to drop in the OTA case. In September 2020, OTA was ordered to pay refunds of more than $10 million to consumers who had signed up for OTA's training courses.

OTA has maintained that its training is legitimate and has benefited thousands of students.

"For over 23 years our focus has always been simple and unwavering: Provide exceptional financial education to empower students," said Eyal Shahar, OTA's Founder and CEO, in a news release after the 2020 settlement. "While this has been an unfortunate dispute, I continue to be moved beyond words by the actions of more than 10,000 students who supported us against the FTC's allegations."

The latest settlement involves two finance companies that serviced some consumer accounts.

Universal Guardian Acceptance, LLC (UGA) and Universal Account Servicing, LLC (UAS), have agreed to settle FTC charges that they facilitated consumers’ payments to OTA, when they knew or should have known that OTA was deceiving consumers.

“These defendants helped Online Trading Academy run its investment training scheme for years, ignoring clear signs that they were profiting off the backs of defrauded consumers,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that facilitate payments can’t turn a blind eye when their clients are defrauding consumers.”

Online Trading Academy ordered to refund consumers’ payments
Consumers who signed up for online trading courses that netted them little or nothing will be eligible for more than $10 million in refunds under the terms of a settlement with the Federal Trade Commission. Online Trading Academy will be required to offer debt forgiveness to thousands of consumers…

Customers paid big bucks

In February 2020, the FTC brought a lawsuit alleging that OTA had deceived consumers with false and unsupported claims that purchasers of its investment training were likely to generate significant income.

OTA charged consumers tens of thousands of dollars for its training and offered financing to enable consumers to pay OTA, in the form of short-term, high-interest retail installment contracts.

UAS underwrote and serviced the contracts, and UGA provided funding for OTA’s operations by agreeing to purchase substantial quantities of the contracts in advance.

The FTC alleges that the companies ignored red flags that OTA was engaged in deception, including consumer complaints, a high cancellation rate, and the fact that the vast majority of purchasers were not paying off their debt within the six month no-interest grace period included in the contracts.

The FTC settled with OTA in September 2020. As part of that settlement, OTA offered debt forgiveness to consumers who owed OTA money on their retail installment contracts.

Under the proposed settlement announced today, UGA is required to offer debt forgiveness to OTA purchasers whose debt is held by UGA.

These consumers were not eligible for debt relief under FTC’s September 2020 settlement with OTA because their debt was not held by OTA. UGA is required to give these consumers notice of the offer of debt forgiveness and consumers will have 45 days to request forgiveness from UGA.

Money

James R. Hood

Jim is a publishing entrepreneur and journalist. He founded ConsumerAffairs in 1998 and earlier was the founder of Zapnews, after holding executive posts at the Associated Press.