FTC Sues ‘Tribal’ Payday Lender for Inflated Fees, Threats

The Federal Trade Commission has asked a federal judge in Nevada to stop a payday lending operation that allegedly piled on undisclosed and inflated fees, and collected on loans illegally by threatening borrowers with arrest and lawsuits.
Like other payday lenders in recent years, the FTC said this operation claimed in state legal proceedings that it is affiliated with Native American tribes, making it immune from legal action.
However, the FTC alleges that this claim does not exempt the payday lender from complying with federal law.
The U.S. agency sued AMG Services, Inc., three other Internet-based lending companies, seven related companies, and six individuals, charging that they violated federal law by deceiving consumers when providing and collecting on payday loans.
One of the defendants who allegedly controlled the lending companies is automobile racer Scott Tucker.
Tucker and his co-defendant in the lawsuit and brother, Blaine Tucker, allegedly transferred more than $40 million dollars collected from consumers by the payday lending companies to another company Scott Tucker controls, Level 5 Motor Sports, for “sponsorship” fees that benefit Scott Tucker’s automobile racing., according to documents filed with the court.
The Tuckers and others in the operation allegedly told borrowers they would be charged the amount borrowed, plus a one-time finance fee.
Instead, the FTC alleges, the defendants made multiple withdrawals from borrowers’ bank accounts and assessed a new finance fee each time, without disclosing the true costs of the loan.
They also falsely threatened that consumers could be arrested, prosecuted, or imprisoned for failing to pay and threatened them with lawsuits if they did not pay, according to the FTC.
In many cases, the inflated fees left borrowers with supposed debts of more than triple the amount they had borrowed.
The FTC urges consumers to consider the alternatives to payday loans.  For more information, see: Fraudulent Online Payday Lenders:  Tapping Your Bank Account Again and Again.

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