Feds finally crack down on payday loan operators like Scott Tucker
The unethical operators of many payday loan enterprises scammed tens of thousands of Americans out of hundreds and hundreds of millions of dollars. Federal government officials in both parties plus state lawmakers — including in Kansas and Missouri — allowed this atrocious behavior to continue for too long.
Many of the worst offenders came from the Kansas City area, making good-sized profits by charging excessive interest on short-term loans.
Which brings us to Scott Tucker.
The Leawood businessman was among the best known figures in these scams, a promoter of loaning small sums of money at large interest rates, often to people down on their luck and desperate to make ends meet from paycheck to paycheck.
Because of the ways the loans were structured, many victims found themselves paying more in interest than they even borrowed in the first place. It was a reprehensible racket that Tucker and other unscrupulous lenders engaged in, all with the support of lawmakers who refused to crack down on it because of the campaign contributions or lobbyist pressure they received.
But over the weekend, news emerged that a federal judge has ordered that Tucker and others pay $1.266 billion to the Federal Trade Commission, which has declared that their businesses deceived consumers.
These payday businesses drained the accounts of consumers and kept them in the poorhouse far longer than if they would have borrowed from reputable sources and paid back loans at reasonable interest rates.
The order from U.S. District Court of Nevada Judge Gloria Navarro included this chilling statement: “Here, Scott Tucker did not participate in an isolated, discrete incident of deceptive lending, but engaged in sustained and continuous conduct that perpetuated the deceptive lending since at least 2008.”
The Star on Sunday said the Kansas City area “has become a nerve center” for the payday loan industry. It is nothing to cheer.
In another recent example, the Consumer Financial Protection Bureau is seeking $132.6 million in restitution from a payday loan company once run by James Carnes of Mission Hills.
Tucker and many other payday loan promoters have denied breaking any laws. They often have said they were just trying to provide a service that other lenders such as banks would not do, providing loans for down-on-their-luck Americans.
That argument held sway for way too long with federal regulators who could have been tougher on Tucker and others.
But the FTC’s actions in this case and others are better late than never.
As we noted last summer in a large-scale and disturbing case, two Kansas City men — Timothy A. Coppinger and Frampton T. Rowland III — were among those who “made quick fortunes by raiding the bank accounts of mostly low-income consumers.” They have agreed to pay settlements totaling $54 million.
Other payday loan operators ran different scams. The FTC is trying to shut more of them down. The two state legislatures in this area could help by passing laws that would make it harder for the payday loan industry to take advantage of consumers. This is not a partisan issue.
This story was originally published October 3, 2016 at 2:15 PM with the headline "Feds finally crack down on payday loan operators like Scott Tucker."