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March 19, 2014

Judge says consumer protections apply in payday lending case

The ruling came in a case involving Overland Park-based AMG Services Inc. and payday lending companies associated with it. The companies — sued over claims they had violated the FTC Act, Truth in Lending Act and Electronic Fund Transfer Act — argued they were exempt because of their affiliation with American Indian tribes.

A federal judge in Nevada has affirmed the Federal Trade Commission’s ability to enforce consumer protections against payday loan companies that affiliate with American Indian tribes.

The ruling came in a case involving Overland Park-based AMG Services Inc. and payday lending companies associated with it. The companies — sued over claims they had violated the FTC Act, Truth in Lending Act and Electronic Fund Transfer Act — argued they were exempt because of their affiliation with American Indian tribes.

“This ruling makes it crystal clear that the FTC’s consumer protection laws apply to businesses that are affiliated with tribes,” Jessica Rich, director of the agency’s Bureau of Consumer Protection, said in an announcement. “It’s a strong signal to deceptive payday lenders that their days of hiding behind a tribal affiliation are over.”

U.S. District Judge Gloria M. Navarro issued the ruling that affirmed an earlier decision by Magistrate Judge V. Cam Ferenbach, who had found in July 2013 that payday lenders fell within the FTC’s power to enforce consumer protection statues regardless of their affiliation with American Indian tribes.

In April 2012, the FTC sued AMG Services and other companies as well as Johnson County businessman and race car driver Scott Tucker.

The suit said the companies charged inflated fees without disclosing them to consumers, threatened borrowers with arrest and lawsuits during debt collection calls and required customers to authorize electronic withdrawals from their bank accounts in advance.

A partial settlement with the principal AMG defendants in July 2013 bans them from using threats of arrest and lawsuit in collections, the FTC said.

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