Yesterday, the Federal Trade Commission (FTC) charged data brokers with illegally selling payday loan applicants’ financial information to a scam operation that then fraudulently took at least $7.1 million from those customers’ bank accounts.

According to the lawsuit [PDF], Sequoia One LLC and Gen X Marketing Group LLC bought loan applications from a slew of payday loan websites and sold the data to a company called Ideal Financial Solutions, Inc. Ideal Financial then used the information to make fraudulent debits from the payday loan applicants’ bank accounts.

Since those applying for payday loans are typically in precarious financial situations, illegal debits likely made bad situations even worse. Not that Ideal Financial cared.

The FTC leaves open the question whether the data brokers sold the information to other shady outfits. The data broker operators — Paul McDonnell, Theresa Bartholomew, and John Bartholomew — agreed to a settlement with the FTC, though they claimed to be unable to pay much of the $7.1 million.

Although Ideal Financial Solutions, Inc. hoped to avoid legal trouble by using fine print to justify its fraudulent conduct, the FTC shut them down in 2013 for illegally charging people’s bank accounts and credit cards to the tune of $25 million. 

Data brokers benefitted from the rise of social media and increased use of electronic payment and records systems greatly. The industry now generates billions in revenue and creates personal dossiers — race, sexual orientation, medical/psychiatric history — on customers throughout the country and world (yes, you) in order to sell information to various businesses and interested parties.

Data brokers are largely unregulated, and, in May 2014, the FTC asked Congress to pass laws forcing the industry to become more transparent.