FTC gets $4.4M from payday lenders for alleged deception
WASHINGTON (1/7/16)--Two payday lenders alleged to have illegally charged consumers undisclosed and inflated fees settle Federal Trade Commission (FTC) charges, the agency announced this week. Red Cedar Services, Inc. and SFS, Inc. have each paid $2.2 million and collectively waived $68 million in fees to consumers that were not collected.
The FTC filed suit in federal court in April 2012 alleging the lenders and other misrepresented how much loans would cost consumers. One example shows that a $300 loan was advertised that it would cost $290 to repay, but consumers were charged $975.
According to the FTC, the defendants also failed to accurately disclose the annual percentage rate and other loan terms, in violation of the Truth in Lending Act, and made preauthorized debits from consumers’ bank accounts a condition of the loans, in violation of the Electronic Funds Transfer Act.
Combined with earlier settlements, the FTC has recovered about $25.5 million thus far in connection with the case, which involves Red Cedar, SFS, AMG Services, Inc., and MNE Services, Inc. and a number of related entities and individuals.
The case has also resulted in an estimated $353 million in waived debt, making it already the largest FTC recovery in a payday lending case, with litigation still continuing against other defendants.