By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
SMALL LOAN COMPANY
Docket No. 2011-019

CEASE DIRECTIVE

In the Matter of
ECOMMISSION FINANCIAL SERVICES, INC.
and
3-CLICK ADVANCE
Austin, Texas


The Commissioner of Banks ("Commissioner") is charged with the administration of Massachusetts General Laws chapter 140, sections 96 to 114 inclusive, and applicable regulations found at 209 CMR 20.00 et seq., and 209 CMR 26.00 et seq ., relating to the licensing and regulation of small loan companies.

Pursuant to the authority granted by Massachusetts General Laws chapter 140 sections 96 to 114, the Commissioner has investigated the activities of ECOMMISSION FINANCIAL SERVICES, INC., ("eCommission") and its subsidiary 3-CLICK ADVANCE ("3-Click") located at 5914 West Courtyard Drive, Suite 320, Austin, Texas, to determine if eCommission and 3-Click have engaged in the business of, or are about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 140, section 96 to 114. Based upon such investigation, the Division hereby issues the following CEASE DIRECTIVE ("Directive") as a result of the findings alleged herein.

A. FINDINGS OF FACT

Unlicensed Activity

  1. Massachusetts General Laws chapter 140, section 96 relative to the licensing requirements for entities engaged in the business of a small loan company states:

    No person shall directly or indirectly engage in the business of making loans of six thousand dollars or less, if the amount to be paid on any such loan for interest and expenses exceeds in the aggregate an amount equivalent to twelve per cent per annum upon the sum loaned, without first obtaining from the commissioner of banks, in sections ninety-six to one hundred and fourteen, inclusive, called the commissioner, a license to carry on the said business in the town where the business is to be transacted.

    The provisions of this section and sections ninety-six A to one hundred and fourteen A, inclusive, shall apply only to loans made primarily for personal, family or household purpose.

  2. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a small loan company in Massachusetts pursuant to Massachusetts General Laws 140, section 96 and its implementing regulations at 209 CMR 20.00 et seq., and 209 CMR 26.00 et seq.
  3. Pursuant to the provisions of Massachusetts General Laws section 96 and the Division's regulation at 209 CMR 20.00 et seq., any business engaged in making loans in the amount of $6,000 or less at an interest rate greater than 12% is required to obtain a small loan license.
  4. The Division's regulation at 209 CMR 26.00 et seq., promulgated by the Small Loans Regulatory Board establishes the maximum rates of charges for interest and the fees imposed for loans that are $6,000 or less. The regulation at 209 CMR 26.01 caps the small loan maximum annual rate of interest at 23% with an annual administrative fee of $20.
  5. eCommission and 3-Click are, and at all relevant times, have been foreign corporations doing business in the Commonwealth of Massachusetts with principal offices located at 5914 West Courtyard Drive, Suite 320, Austin, Texas. According to information reflected on the 3-Click's website at www.3clickadvance.com, 3-Click Advance is a subsidiary of eCommission.
  6. Between January 3, 2011 and March 31, 2011, the Division was forwarded copies of two solicitations ("Solicitations") received by a Massachusetts consumer from eCommission and 3-Click. Copies of the Solicitations are attached as Exhibit 1 pdf format of ecommissionexhibit1.pdf
and Exhibit 2 pdf format of ecommissionexhibit2.pdf
.
  7. The Solicitation attached as Exhibit 1 pdf format of ecommissionexhibit1.pdf
informed the consumer that commission advances could be obtained within twenty-four hours of applying for an advance with no credit check and no paperwork. The Solicitation stated in part "3ClickAdvance is different from other commission advance companies because we don't run your credit, there is no paperwork to scan, fax or email and your application is completed in just 3 clicks…no messing around!"
  8. The Solicitation directed consumers to contact 3-Click via telephone, electronic mail or through the Corporation's website at www.3clickadvance.comin order to receive information on an advance loan.
  9. The Division's review of the webpage referenced in the Solicitation revealed that the fees and costs advertised on 3-Click's website for the advance loans were in excess of the statutory requirement set forth above in paragraphs 3 and 4 of this Directive. The webpage which solicited its services to real estate brokers indicated that there was "no lengthy application, no credit check" and real estate brokers would receive the advance on their commission in twenty-four hours.
  10. The webpage provided a disclosure of fees and costs associated with the advance loans by stating that "the advance fee is added to the net advance we fund to you, meaning you pay nothing upfront to receive our service. 3-Click Advance earns its fee upon successful repayment of the advance at close of escrow."
  11. The webpage also stated that that consumers that applied for a $2,000 advance would have to pay a $500 advance fee, if consumers opted for a $1,500 advance they would be required to pay a $400 advance fee, and those consumers that opted for a $1,000 advance would be required to pay a $300 advance fee. All three fees advertised were in excess of the fees permissible under the provisions of Massachusetts General Laws chapter 140 section 94 and the regulations at 209 CMR 20.00 et seq., and 209 CMR 26.00 et seq.
  12. A review of the online application and 3-Click's website indicated that applicants could only apply for fixed advances in the amount of $1,000, $1,500 or $2,000 and the dollar amount of the advance did not appear to be affected by the total commission that the realtor would ultimately receive. Additionally, the website contained no description of the type of lien or any information regarding a collateralization requirement for the loan. Based upon on a review of the information on the 3-Click's website, it appears these loans terms are in excess of statutory limits.
  13. The Solicitation attached as Exhibit 2 pdf format of ecommissionexhibit2.pdf
directed consumers to contact eCommission to qualify for an advance loan and stated "Money to Pay Your Taxes." The Solicitation further stated "Meeting the April 18th tax deadline is quick and easy when you use eCommission, we provide ADVANCE PAYMENT of your commissions in 24 HOURS." The Solicitation directed consumers to eCommission's website at www.ecommission.com.
  14. A review of the website revealed that eCommission provided advances on pending sales, bridge loans, short sales and mortgage loans, specifically reverse mortgage loans. The website provided limited information on the fee's that would be incurred for obtaining an advance loan from eCommission, however indicated that pending sales loans could be "up to $10,000," while advances on origination fees for reverse mortgage loans could be "up to $6,000."
  15. The webpage did not disclose any fees and costs associated with the advance loan, and indicated that the fees and costs would vary depending on the loan amount and the consumer's credit history.
  16. Both webpages reviewed by the Division notified the consumer that the funds would be either wired directly to the consumer or deposited in their personal bank account. Additionally, eCommission's webpage included a section that answered "frequently asked questions" which states in part "if for any reason we advance a commission to an agent on a sale that falls through, it is 100% the agent's responsibility to either repay the advance or replace it using future earned commissions."
  17. Massachusetts General Laws chapter 140, section 110 states in part:

    Whoever, not being duly licensed as provided in section ninety-six on his own account or on account of any other person not so licensed, engages in or carries on, directly or indirectly, either separately or in connection with or as a part of any other business, the business of making loans or buying notes or furnishing endorsements or guarantees, to which sections ninety-six to one hundred and eleven, inclusive, apply, shall be punished by imprisonment in the state prison for not more than ten years or in a jail or house of correction for not more than two and one half years, or by a fine of not more than ten thousand dollars, or by both such fine and imprisonment. Any loan made or note purchased or endorsement or guarantee furnished by an unlicensed person in violation of said sections shall be void.

  18. According to the Division's records, as of the date of this Directive, eCommission does not hold a current license nor has it filed an application with the Division to obtain a small loan company license.
  19. According to the Division's records, as of the date of this Directive 3-Click does not hold a current license nor has it filed an application with the Division to obtain a small loan company license.

    B. CEASE DIRECTIVE

  20. eCommission and 3-Click are hereby directed to cease engaging in the small loan company business until such time that both eCommission and 3-Click have obtained a license to conduct business in the Commonwealth pursuant to General Laws chapter 140 section 96.
  21. Within five (5) days of receipt of his Directive, eCommission and 3-Click are directed to submit the following to the Commissioner:
    1. A detailed record, prepared as of the date of submission, of all pending applications for advance loans for Massachusetts consumers. The records to be produced shall include the consumers' names, addresses and the dollar amount of each advance loan;
    2. A detailed record, as of the date of submission, of all advance loans to Massachusetts consumers that remain outstanding; and
    3. A detailed record of all advance loans that have been repaid by Massachusetts consumers in the past twenty (24) months.
  22. eCommission and 3-Click must submit a response within ten days of receipt of this Directive. The response must indicate whether eCommission and 3-Click will seek to be licensed as a small loan company, if so, indicate approximately, when completed applications will be submitted to the Division. The response submitted by eCommission must also include a signed copy of the enclosed affidavits, completed by an authorized officer, attesting that eCommission and 3-Click will immediately cease from engaging in the small loan company business until such time as a license and/or approval to engage in such activities is issued by the Commissioner.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 26th day of May, 2011

David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts