This week the FTC has filed a lawsuit against AMG Services Inc. – the parent company that ran over 15 websites providing payday loans online. The complaint of the Federal Trade Commission states that AMG operating since 2002 was under control of Scott Tucker, the race car driver, and others who earned over $100 million in revenue. The company declined to make any comments. According to the optimistic expectations of the FTC, the customers will be repaid for their losses.
Defense Of Tribal Affiliation
Despite the lawsuit filed by the FTC unfolds, most of payday loan companies continue to operate saying that they are exempt from the federal regulations being owned by the Indian tribes. However, the FTC states that the tribal affiliation doesn’t exempt payday lenders from complying with federal law.
The Federal Trade Commission received about 7,500 consumer complaints related to AMG and its relative companies. Still it is considered that is only a portion of those who were defrauded.
Payday Lending Practices
Following the reports of FTC, there was a common scenario to charge customers a $90 fee on $300 loaned. But instead of withdrawing the payday loan payment and a one-time fee on a particular date, the operators of the websites usually withdrew installment payments from the borrower’s bank account on multiple days and each time assessed a fee. Under such system that was not disclosed to the applicants the total payment on loan of $300 hit $975.
Some Lenders Use Illegal Tactics
The FTC took action against the practices of some payday lenders that allegedly piled on inflated, undisclosed fees and illegally collected on loans threatening debtors with lawsuits and even arrest. The FTC requested the federal court to prevent the illegal tactics of particular payday lenders while the agency pursues its case against defendants.
In fact, it is the second time during the last seven months that the Federal Trade Commission has brought a lawsuit against a payday lending company that uses the defense of the tribal affiliation against actions held by the state authorities.