Payday Lender Slapped With $1.3 Billion Judgment

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A payday lender enterprise found itself on the receiving end of a record near-$1.3 billion judgment after a federal judge found its operators deceived consumers nationwide and illegally charged undisclosed financing fees.

AMG Services Inc., helmed by race car driver Scott Tucker, has also been banned from consumer lending and prohibited from engaging in illegal debt collection practices as part of the judgment, the Federal Trade Commission announced on Monday.

The record judgment stems from a compliant filed by the FTC back in 2012. It accused AMG’s operators of making multiple withdrawals from customers’ bank accounts and assessing a new fee each time, even though they advertised they would only charge the loan amount plus a one-time fee. For example, according to the agency, one borrower of $300 found herself on the hook for $975, even though she was led to believe that her loan would cost a total of $390. The near-$1.3 billion judgment accounts for the difference between what customers actually paid and what they were told they would have to pay on their loans, the FTC said.

As part of the ruling, Judge Gloria Navarro found Tucker was individually responsible for the unlawful conduct. Tucker’s attorneys were not immediately available for comment on the ruling. In February, he pleaded “not guilty” to criminal charges filed against him in New York over his online payday lending enterprises’ practices.

AMG Services operated a number of payday loan companies, including AMG Capital Management LLC, Level 5 Motorsports LLC, Black Creek Capital Corporation and Broadmoor Capital Partners. Borrowers who believe they are entitled to a refund post-judgment can sign up for updates on the FTC’s website.

When Taking Out a Payday Loan

Payday loans are generally known for their costly fees and high annual percentage rates, so it’s best to use them with caution. (You can find some alternatives to payday loans here.) If you do need to take one out to get you through an emergency, you should aim to pay it back as soon as possible and you should also thoroughly read the terms and conditions, so you know what you’re signing up for.

It also helps to familiarize yourself with your consumer rights. Many states have usury laws that regulate or ban the payday loan industry outright. If you think a lender may be in violation of these laws, or your individual contract, you can consult a consumer attorney, file a complaint with the Federal Trade Commission and/or Consumer Financial Protection Bureau, or contact your state’s attorney general.

Remember, too, if you find yourself repeatedly resorting to payday loans, it may help to work on your credit. A good score can help you qualify for financing with better terms and conditions. You can improve your credit scores by paying down high credit card balances, disputing errors on your credit reports and identifying your specific areas of opportunity. And, as you work to build your credit, you can keep an eye your progress by viewing two of your credit scores, updated every 14 days, for free on Credit.com.

Image: AndreyPopov

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