WASHINGTON (Legal Newsline) – The Federal Trade Commission has reached settlements with payday lenders Red Cedar Services and SFS Inc. for $2.2 million each over allegations they charged consumers illegal fees.
“Payday lenders need to be honest about the terms of the loans they offer,” Jessica Rich, director of the Bureau of Consumer Protection, said. “These lenders charged borrowers more than they said they would. As a result of the FTC’s case, they are paying a steep price for their deception.”
The current settlement, in which these companies will also waive $68 million in fees to consumers that have yet to be collected, is part of ongoing effort by the FTC to recover money from Red Cedar and SFS, as well as AMG Services Inc. and MNE Services Inc. In total, the FTC has recovered $25.5 million and forced $353 million in waived debt. This is the largest payday lending case the FTC has ever won.
The settlement stems from FTC charges from 2012 that alleged the lenders misrepresented how much loans would cost consumers – a violation of the FTC Act. The defendants also allegedly failed to accurately disclose the annual percentage rate and other loan terms – a violation of the Truth in Lending Act.