Payday Service To Stop 'Deceptive' Lending
Last year, the Federal Trade Commission (FTC) sued a payday loan company, which claims to be owned by three Indian tribes, for allegedly deceiving borrowers and violating federal laws. Now the company, AMG Services, and the affiliated tribes have agreed to change the practices that the FTC said were illegal, reported the Center for Public Integrity.
The Overland Park, Kansas-based AMG Services is a payday loan service founded and managed by Scott Tucker, the endurance race-car driver who recently won the Baltimore Grand Prix. The company is technically owned by the Miami and Modoc of Oklahoma and the Santee Sioux of Nebraska. But the tribes receive just 1 percent of the revenue from the business, according to an attorney general of Colorado who has battled payday loan services in court for years. Bank records show the majority of the money supports Tucker's racing team, Level 5 Motorsports.
The lenders operate under various different brand names including UnitedCashLoans, US FastCash, 500Fastcash, OneClickCash and Ameriloan. The services allegedly violate state payday lending laws by offering loans to residents of 17 states that restrict or forbid payday loans. Borrowers of these services under AMG previously had to give the lenders direct access to their banking accounts, and interest-only payments were automatically withdraw from their checking account for months. For instance, a $300 loan payment would amount to nearly $1,000, which the FTC charged is not properly disclosed under the Truth-in-Lending Act.
The lenders have now agreed not to require access to a borrower's bank account, and the loans will be paid off in one payment. "The lenders also agreed not to tell borrowers that they could go to jail or be sued if they didn't pay the loan back," the Center for Public Integrity reported.
The case awaits trial in federal court. The tribes argue they have sovereign immunity, so the FTC cannot sue them.