Scott Tucker (credit: Level 5 Motorsports)
The Federal Trade Commission today took up a case that had thwarted state authorities for years, accusing an Internet payday lender with ties to Indian tribes of illegally deceiving borrowers.
The agency is asking a federal judge in Nevada to order AMG Services of Overland Park., Kan., to stop the deceptive practices and pay back borrowers who its says got cheated.
“The defendants have deceived consumers about the cost of their loans and charged more than they said they would, said Malini Mithal, the FTC’s assistant director of financial practices. “The FTC is trying to stop this deception and get refunds for consumers.”
While the company has won arguments in state courts that it has tribal sovereign immunity, allowing it to make loans even in states that restrict or forbid payday loans, that protection doesn’t apply to the federal courts. Court records suggest the business has made more than $165 million, charging interest rates as high as 800 percent on small loans. Borrowers have complained in droves about the lender’s tactics. Law enforcement authorities have received more than 7,500 complaints about the business, the FTC says.
Among the defendants in the lawsuit is Scott Tucker, a professional race-car driver from Kansas City, Kan. Tucker became a millionaire from the payday-lending business he started more than a decade ago. When state investigators started digging into the company’s practices, Tucker came up with a plan to sell the business to three Indian tribes while continuing to run the company and to collect most of its profits, according to recent court records filed in Colorado. A September investigation showed Tucker’s involvement in the tribal payday lending business.
“The defendants have deceived consumers about the cost of their loans and charged more than they said they would, said Malini Mithal, the FTC’s assistant director of financial practices. “The FTC is trying to stop this deception and get refunds for consumers.
The companies and individuals targeted are in five states - Arizona, Delaware, Florida, South Dakota and California. McGraw said some of the companies have