Payday Lenders Fined $21 Million for Charging Undisclosed and Inflated Fees
Two payday lending companies will pay $21 million in fines and waive $285 million in charges to settle a 2012 Federal Trade Commission (FTC) complaint.
According to the complaint, AMG Services and MNE Services violated the law by charging consumers undisclosed and inflated fees for small, short-term loans. The companies also failed to disclose other loan terms and required that borrowers allow for preauthorized debits from their bank accounts as a condition for approval.
The FTC charged that the companies misrepresented how much the loans would cost. Although a loan contract stated that a $300 loan would cost $390 to repay, the company charged borrowers $975.
The settlement is the largest payout in payday lending case, said the FTC.
MNE Services did business as Ameriloan, United Cash Loans, U.S. Fast Cash, Advantage Cash Services, and Star Cash Processing. AMG serviced the loans.
The settlement also bars the defendants from misrepresenting the terms of any loan product, including the loan's payment schedule, the total amount the consumer will owe, the interest rate, annual percentage rates or finance charges, and any other material facts.