A federal judge in Nevada said professional racecar driver Scott Tucker and several of his companies owe $1.27 billion to the Federal Trade Commission (FTC) after systematically deceiving payday lending customers about the cost of their loans. In one example, lending documents indicated that a customer who borrowed $500 would only have a finance charge of $150, for a total payment of $650- but the actual finance charge was $1,425.
Chief Judge Gloria Navarro of the federal court in Las Vegas, Nev., said in an order that Tucker was “specifically aware” that customers often did not understand the terms of their loans, and was at least “recklessly indifferent” toward how those loans were marketed. Judge Navarro wrote:
It was reported that Scott Tucker did not participate in an isolated, discrete incident of deceptive lending, but instead, he engaged in sustained and continuous conduct that perpetuated the deceptive lending since at least 2008. Judge Navarro also barred Tucker from engaging in consumer lending.
The FTC asked Judge Navarro to direct the turnover of some previously frozen assets to help satisfy the judgment. Tucker, who races in the United States and Europe, faces separate criminal charges in Manhattan, where prosecutors accused him of running a $2 billion payday lending scheme that exploited 4.5 million consumers. A trial in that case is scheduled for April 17 of next year. Tucker pleaded not guilty in February.
Eighteen U.S. states and Washington, D.C. prohibit payday lending, or impose rate caps that effectively outlaw the practice, according to the Consumer Federation of America. In its 2012 civil complaint, the FTC alleged that Tucker’s businesses, such as National Money Service, caused many customers to pay more than triple the amounts they had borrowed. The $1.27 billion judgment also covers AMG Capital Management LLC, Level 5 Motorsports LLC and two other Tucker companies. The judgment reflects the $1.32 billion sought by the FTC, less about $52 million collected from or owed by other Defendants. Judge Navarro wrote:
Where, as here, consumers suffer economic injury resulting from a defendant’s violations of the FTC Act, equity requires monetary relief in the full amount lost by consumers.
As we have written on numerous occasions, the payday lending industry takes unfair advantage of people. This case is typical of how most in the industry operate. The federal government as well as all state governments must do a better job of regulating and controlling the industry.
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