Justice Department targets banks serving online payday lenders: WSJ
(Reuters) - The U.S. government has issued subpoenas to banks and other companies that handle payments for an array of questionable financial ventures, including online payday lenders, the Wall Street Journal reported, citing Justice Department officials.
The journal did not identify the banks and other companies to whom subpoenas had been issued.
A shift in strategy appears to be in place, with the government going after the infrastructure that enables companies to withdraw money from people's bank accounts rather than just targeting individual firms.
Payday lending volumes increased by 10 percent to $18.6 billion in 2012 from the previous year, accounting for nearly 40 percent of industry-wide payday loan volume, according to investment bank Stephens Inc, said the newspaper.
Regulators are also bearing down on telephone and online offers in which marketers try to get people to pay for non-existing services or phony offerings of work-from-home programs, the paper quoted officials as saying.
"We are changing the structures within the financial system that allow all kinds of fraudulent merchants to operate," a Justice Department official said, with the intent of "choking them off from the very air they need to survive". (link.reuters.com/jyh32v)
Justice Department could not be reached immediately for comment outside of regular U.S. business hours.
(Reporting by Vijay Vishwas in Bangalore; Editing by Paul Tait)
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