Turning the tables on deceptive payday lenders

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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.



Happy to hear that Pay Day Loans are having their day in Court, misrepresenting their true modus operandis and true intention of deceiving needed persons, putting them in worst situations then they were prior to accepting a short term loan.
Get them out of business...

Why not just shut them ALL DOWN!!!!!

Great idea Jay Johnson. There was fraud on Wall Street once. Should we shut down Wall Street too? I think a bank misrepresented something once. Should we shut down all banks?

Our President lied once before, should we shut down the presidency? I would bet you lied one time, should we shut you down?

I say shut them all down. They take advantage of poor people with their huge interest rate. Maybe we should shut Michael down he probably owns one.

I have received alot of emails like the ones you speak of in this email,I have also gotten a email of where they claim that they sent the loan to my account but I never received and then they threaten me that they are sueing me for and when I told them I never got the loan from them,now they keep trying to get me to except the loan from them again same amount same numbers on it and some people and I also gotten threats on the phone over a few of these loans and calls and I have gotten all names of them doing this and companies name of lenders and also have ran into even more of them trying to change their tactics and lender names but they are the same people.Thought you outta know,that they are still doing what you have said its just now they changed names,and
etc.If you need more information just email me ,I give you all information I have on this subject. sincerely monica

We do need to get the unscrupulous operators out of the business. Small loan operators do provide a necessary service to consumers. There are companies that DO follow the law. Why punish them for the actions of the few bad apples.

The above data is confusing to the reader if he or she has not read the FTC's lawsuit’s plea, which is on the Internet. This data should read that the original loan was for $300 due in 16 days (not the usual 14) at a NOMINAL unit-periodic rate of 30%. The $975 was what was paid during 9 renewals, each for 16 days, and with some partial payments of $50 on some of the payment days. The NOMINAL APR on that loan is 684.38%, calculated using the NOMINAL APR method, the rate for a unit-period multiplied by the number of days in a unit-period, [using Excel mathematical symbols, (90/300)*(365/160)*100 = 684.38%. If the mathematically-true, COMPOUND method is stated, then that calculation would be, using Excel mathematical notations, calculated as ((((90/300)+1)^(365/16))-1)*100, which equals 39,649.60%. The Truth in Lending Act allows a tolerance of accuracy of one eighth of one percent, 0.125% in stating a NOMINAL APR. The mathematically-true APR is 311,721 of those tolerances greater than the current Nominal method, calculated as (39,649.60%-684.38%)/0.125%. Astronomically wrong! But the Consumer Financial Protection Act guardians seem unresponsive to a change to the Truth. England uses the mathematically-true, compound method in lending and the USA uses the compound method in expressing savings and calls it the Annual Percentage Yield. In the USA the compound method now used should be called the CAPR in lending. Need verification … call a PhD in Finance!

I am a lone consumer advocate for expressing the mathematically-true, COMPOUND Annual Percentage Rate in Lending. Your case keeps coming up in my Google-Alert on “payday loans.” Those reporting sites only express horror of a $300 payday loan costing $975 … with no data on the total time period. Fortunately, your case is on the Internet at http://www.ftc.gov/sites/default/files/documents/cases/2012/04/120402amgcmpt.pdf .
I write to you to inform you of the mathematically-true, Compound APR in this case. Your illustrate the data on the16-days loan at the NOMINAL APR of 30% per 16-day period. In accordance with the Truth in Lending Act of 1968, at Appendix J (b)(1) the NOMINAL Annual Percentage Rate is determined by multiplying the rate for a unit-period by the number of unit-periods in a year. In your case that is 684.38%, calculated as: 30*365/16. The mathematically-true, COMPOUND APR is 39,649.60% calculated as ((((30/100)+1)^(365/16))+1)*100. TILA allows a tolerance of one-eighth of one percent, 0.125%. The mathematically-true CAPR is not merely slightly over one of the tolerances, it is 311,721, calculated as (39,649.60%-684.38%)/0.125%.

I have taken out numerous payday loans and have never paid a red cent back. They can trash my credit all they want. I care less. I win.

What are the consumers going to get back from these fraudulent companies. I think all of us should be reimbursed every dollar from what was collected from these people.

I'm dealing with it right now and they had me at almost 1000 for 400. I will be filings complaint

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