State Urges Residents to Exercise Caution Regarding Online Loans

DCCA Headquarters where the insurance division is located
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DCCA Headquarters where the insurance division is located
DCCA Headquarters where the insurance division is located

HONOLULU – The Department of Commerce and Consumer Affairs (DCCA) Office of Consumer Protection (OCP) advises Hawaii residents to exercise caution when searching for a loan through an online lender.

Consumers searching for a loan online may actually be dealing with an online lead generator that may sell the personal financial information to data brokers. Data brokers then resell the information to lenders. The lenders may use this personal information to gain access to personal checking accounts to deposit unauthorized loans and debit unauthorized fees without consent.


“Hawaii residents should be extremely cautious before giving out their personal identification or financial account information to anyone they’ve never dealt with before, whether in person, on the phone or online,” OCP Executive Director Bruce B. Kim said.

This week, the federal Consumer Financial Protection Bureau (CFPB) announced an enforcement action against the Hydra Group (Hydra) alleging that Hydra operates through a maze of corporate entities such as SSM Group, Hydra Financial Limited Funds, PCMO Services, and Piggycash Online Holdings, created to avoid regulatory oversight. The CFPB alleges that the consumers’ trouble began after submitting sensitive, personal financial information to online lead generators that matched consumers with payday lenders. The lead generators auctioned off the consumer’s information to firms that make payday loans. In some cases, they sell large volumes of leads to data brokers that then re-sell them to lenders. The Hydra group would buy this information, use it to access consumer’s checking accounts to deposit unauthorized payday loans, and then begin debiting unauthorized fees.

When unsuspecting consumers complained about the unauthorized loans, they were presented with bogus documents allegedly justifying the withdrawals. If consumers closed their checking accounts to avoid the unauthorized withdrawals, Hydra may have sold the bogus debt to third-party debt collectors, who then pursued repayment of the bogus loans and charges.

The CFPB obtained an order from the U.S. District Court for the Western District of Missouri on Sept. 9, 2014, freezing the defendants’ assets and installing a receiver to oversee the business and ensure that any illegal conduct is stopped. The court has scheduled a hearing on the CFPB’s request for a preliminary injunction, in which the CFPB seeks to keep the relief in place while the case proceeds. A copy of the CFPB’s complaint against Hydra can be found at

Whether or not dealing with an online lender results in a loan, simply entering information on the site may result in severe unintended financial consequences. Selling personal and financial information is a big business. People who buy personal information may use it to sell unsuspecting consumers goods and services, charge them for goods and services they never agreed to buy, charge amounts other than what was authorized, or try to commit identity theft.

For information about online lenders, visit the Federal Trade Commission website at:

Consumers can also contact OCP in Honolulu at 586-2630 with questions, or to file a complaint. People can also visit OCP’s website at for more information about filing a complaint.

The State of Hawaii’s DCCA Office of Consumer Protection educates and protects consumers from unlawful acts or practices by companies that may cause harm to consumers. If you have further questions about our services, contact the Office of Consumer Protection at (808) 586-2636.





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