The FTC recently settled with Nevada-based owners and operators of a national payday lending company over allegations that the company withdrew money from consumer accounts without consumer permission and overcharged consumers in violation of the TILA/Regulation Z.
The FTC’s complaint, filed last year in the U.S. District Court for the District of the Nevada, alleged, among other things, that the defendants violated the FTC Act, the Telemarketing Sales Rule, TILA/Regulation Z, and EFTA/Regulation E, by marketing loans with fixed payback terms and promising consumers that their loans would be repaid after a pre-determined number of payments. However, even after the loans’ original principal amount and stated repayment cost had been repaid, the company continued to withdraw money from borrower accounts. In many cases, this conduct would continue until borrowers either instructed their banks to reject the initiated withdrawal or borrowers closed out their accounts all together.
According to the FTC’s settlement, the company has been “permanently banned from the payday lending industry, including making loans or extending credit of any kind,” in addition to a $114 million monetary judgment to be suspended upon transfer of all the company’s holding accounts to the FTC. Lastly, the company must forgive any outstanding consumer loans.