$1 Civil Money Penalty Ordered to Fraudulent Payday Lenders in Kansas City

Inside Subprime: Aug 20, 2018

By Ben Moore

After being recently convicted for running fraudulent payday lending schemes, Richard Moseley Sr. and his son, Richard Moseley, Jr. have been ordered to pay a $1 civil money penalty. The Bureau of Consumer Financial Protection reported that a federal district court in Missouri ordered the settlement between the Bureau and the Moseleys, as well as the twenty corporations they controlled in their payday loan schemes in Kansas City.

Richard Moseley, Sr. and his son, Richard Moseley, Jr., were recently convicted of running an illegal payday loan scheme worth $227 million. A New York jury convicted the Moseleys on “conspiracy to commit wire fraud, aggravated identity theft, and making false disclosures under the Truth in Lending Act.” The Moseleys oversaw the Hydra Lenders, a group of companies that made millions in payday loans, generating over $69 million in profit in the Kansas City area since early 2008. The Hydra Lenders were discovered to be depositing unauthorized loans in borrowers’ bank accounts. The loans came with perpetuite biweekly “finance charges” that were taken directly from their bank accounts, access the group gained from third-party data brokers. In most cases, the borrowers were completely unaware of the loans until they were deposited into their bank accounts and the finances charges began to be withdrawn. No loan agreements were ever put in place prior the loan deposits. If a loan agreement ever was documented, prices and repayment plans were falsely represented.

Both Richard Moseley, Sr. and Richard Moseley, Jr. have been completely banned from the payday lending industry, though they have appealed the convictions. In addition to being banned, they were required to forfeit almost $14 million in assets immediately, as well as pay the $1 civil money penalty, which is so low due to their inability to pay. The consent order also imposed a $69 million judgement for consumer redress, but because the defendants are now very limited in their ability to pay, this is suspended as long as they are in compliance with the other requirements of the consent order. Moseley Sr. was also convicted to ten years in prison.

After a tumultuous year for the payday lending industry, the conviction of Richard Moseley Sr. and his son have revealed the darker side of an industry already seen as predatory on low-income families. While payday loans are marketed towards those who are in financial distress, the high interest rates and finance fees associated with the loans have been criticized greatly as being debt traps for those who wish to borrow. And as seen by the Moseleys, lenders will go to great lengths to even bypass the state limits for interest rates, as well as illegally gain access to borrowers bank accounts to siphon funds from unsuspecting customers. Hopefully this conviction will continue to raise awareness of the predatory practices of payday lenders.

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