Federal Judge Rules Against AMG Payday Lending Operation

June 4, 2014
American Banker 
payday lending news
U.S. District Judge Gloria M. Navarro in Nevada has ruled that Kansas-based payday lending operation AMG Services intentionally deceived borrowers about the cost of their loans. AMG and some of its affiliated companies that had ties to American Indian tribes were found to have inflated fees and failed to disclose charges.

The inflated fees left borrowers with debts higher than the original amount they borrowed, Navarro said. In her May 28 decision, she wrote that employees of the lending firms "were instructed to conceal how the repayment plans worked in order to keep potential borrowers in the dark."

The Federal Trade Commission (FTC) filed charges against the companies in April 2012, accusing them of failing to disclose loan terms and of improperly requiring customers to preauthorize electronic payments before they received a loan. AMG and affiliates used deceptive documentation for at least 5 million loans, the FTC reported. Last July, the companies reached a partial settlement with the agency on several issues. Under this settlement, the lenders were prohibited from using threats of arrest to collect loan payments and were banned from requiring advance bank account withdrawals. Navarro ruled in March that the lenders' tribal affiliations did not exclude them from the FTC's jurisdiction.

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