FTC targets alleged payday scam, race car driver
A payday lending operation that offers quick cash over the Internet to desperate people, and the race-car driver allegedly running it, are under federal scrutiny after more than 7,000 complaints to authorities.
The Federal Trade Commission has filed a complaint in U.S. district court in Nevada against driver Scott Tucker, his brother and several Internet-based lending companies, including AMG Services, Inc.
Tucker has raced in the American Le Mans Series. The FTC charges that he and others controlled lending companies that piled on undisclosed and inflated fees - in some cases more than triple the amount borrowed - and then collected on the loans illegally by threatening borrowers with arrests and lawsuits.
In one example, a consumer was told that a $500 loan would cost him $650 to repay. Instead, the FTC says, the defendants attempted to charge him $1,925 to pay off the loan. The agency says he was threatened with arrest if he didn't pay that amount.
Payday loans are typically small, short-term loans with extremely high interest rates that are effectively advances on a borrower's next paycheck.
According to the FTC, the payday lending operation involving Tucker has claimed in state legal proceedings that it is affiliated with Native American tribes and therefore immune from legal action. Tribal affiliation does not exempt Tucker and others from complying with federal law, the commission says.
Over the last five years, more than 7,500 complaints about the operation have been filed with law enforcement authorities.
Tucker and his brother, Blaine, are accused of transferring more than $40 million collected from payday loans to consumers to another company, Level 5 Motor Sports, which is controlled by Scott Tucker. The FTC says the money was transferred as ''sponsorship'' fees for Tucker's racing career.
Tucker and his brother could not immediately be reached for comment.