Your BBB® has learned that Federal Trade Commission (FTC) charges against two online payday lending companies have been settled. According to the FTC News Release, AMG Services, Inc. (an Oklahoma Tribal Entity) and MNE (Miami Nation Enterprises) Services, Inc. will pay $21 million and will waive another $285 million in charges that were assessed on consumers’ accounts but not yet collected. This was the largest FTC recovery in a payday lending case according to the news release.
The case has been working its way through court since April 2012 when the FTC first filed charges in federal district court in Nevada against AMG Services, Inc. and MNE Services, Inc. and several other defendants. MNE Services would lend the money to consumers, and AMG serviced the loans. The names that MNE did business under were Ameriloan, United Cash Loans, US Fast Cash, Advantage Cash Services, and Star Cash Processing.
Among the allegations against the companies are that they charged consumers undisclosed and inflated fees and misrepresented to consumers how much loans would cost them. An example given in the news release was that “the defendants’ contract stated that a $300 loan would cost $390 to repay, but the defendants then charged consumers $975 to repay the loan.
Other charges against the defendants according to the news release were that they violated the Truth in Lending Act (TILA) by “failing to accurately disclose the annual percentage rate and other loan terms” and that they violated the Electronic Funds Transfer Act (EFTA) by “making preauthorized debits from consumers’ bank accounts a condition of the loans.”
Under the terms of the settlement in addition to the monetary judgments, the defendants are prohibited from “misrepresenting the terms of any loan product, including the loan’s payment schedule, the total amount the consumer will owe, the interest rate, annual percentage rates or finance charges and other material facts.” It also prohibits the defendants from violating TILA and EFTA.
Jessica Rich, Director of the Bureau of Consumer Protection, said in the news release, “The settlement requires these companies to turn over millions of dollars that they took from financially-distressed consumers, and waive hundreds of millions in other charges. It should be self-evident that payday lenders may not describe their loans as having a certain cost and then turn around and charge consumers substantially more.”
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