The Federal Trade Commission (FTC) accused online payday lenders SFS and Red Cedar Services of asking consumers to pay inflated fees. The lenders settled the FTCs charges regarding illegal fees. They agreed to pay $2.2 million each and jointly waived $68 million in fees that had not been collected.
So far the FTC has recovered around $25.5 million linked to the case involving SFS, Red Cedar Services, MNE Services, AMG Services and several related individuals and entities.
Around $353 million in debt has also been waived, making this the biggest recovery by the FTC in a payday lending case. Litigation is still ongoing against other defendants.
According to Jessica Rich, Director of the Bureau of Consumer Protection, the lenders are paying a high price for deceiving borrowers and asking them to make extra payments. The lenders and others had misrepresented the cost consumers would have to pay for the loans, violating the FTC Act.
They did not accurately reveal the annual percentage rate and other terms of the loan, violating the Truth in Lending Act (TILA). They also violated the Electronic Funds Transfer Act (EFTA) by making pre-authorized debits from the bank accounts of consumers.
The federal court found that the loan documents were deceptive and they violated the Truth in Lending Act (TILA), as alleged by the FTC. It passed orders prohibiting SFS and Red Cedar Services from misrepresenting the terms of loan products. The defendants were also barred from violating the EFTA and TILA.
The aim of the Federal Trade Commission (FTC) is to educate and protect consumers and to encourage competition. To find out more about your rights as a consumer or to file a consumer complaint, you can contact the FTC at 1-877-FTC-HELP (1-877-382-4357) or at www.ftc.gov.
* Indicates number of rounds of checking / editing / polishing