The FTC has brought a number of cases against payday lenders who use deceptive or unfair tactics. But a just-announced settlement with online lenders AMG Services and MNE Services comes with a twist: This time it’s the lenders who will be paying – and it’s the FTC’s largest recovery in a payday lending case.
AMG and MNE were defendants in an action against more than a dozen companies and corporate officers, alleging they violated the FTC Act, the Truth in Lending Act, and the Electronic Fund Transfer Act. MNE lent to consumers under the trade names Ameriloan, United Cash Loans, US Fast Cash, Advantage Cash Services, and Star Cash Processing. AMG serviced the loans.
According to the complaint, the defendants misrepresented how much loans would cost consumers and charged them undisclosed and inflated fees. Here just one example: The defendants’ contract said a $300 loan would cost consumers $390. But what did people really have to shell out to repay the loan? $975.
To settle the case, AMG and MNE will pay $21 million and will waive another $285 million in charges the companies assessed, but didn’t collect. The order also puts protections in place to change how the companies do business and specifically prohibits misrepresentations about the terms of any loan, the payment schedule, the total amount the consumer will owe, the interest rate, annual percentage rates or finance charges, and any other material facts.
The FTC’s litigation against the other defendants – SFS, Inc., Red Cedar Services, AMG Capital Management, Level 5 Motorsports, LeadFlash Consulting, Black Creek Capital Corporation, Broadmoor Capital Partners, Scott A. Tucker, the estate of Blaine A. Tucker, Don E. Brady, and Robert D. Campbell, and two relief defendants – continues before a federal judge in Nevada.