Kansas City Payday Loan Baron to Pay $1.3 Billion

Inside Subprime: Dec 10, 2018

By Grace Austin

A $1.3 billion award against a former professional race car driver and payday loan tycoon has been upheld by an appeals court, but that decision could be reviewed in the future. The early December ruling was decided by a three-judge panel out of the U.S. Court of Appeals for the 9th Circuit in San Francisco.

In October 2016, Scott Tucker and other defendants were ordered to pay $1.3 billion to the Federal Trade Commission for ripping off consumers with its payday loans; Tucker was also banned from the payday loan industry. Tucker appealed the ruling soon after.

The FTC first brought charges against Tucker and other defendants in 2012.

In this December decision, the appeals court said Tucker didn’t disclose loan terms properly to borrowers, specifically that loans would renew automatically, resulting in extra fees. The panel also said that the large judgment in favor of the borrowers was not unreasonable. It upheld a lower court’s decision.

The Kansas City, Missouri-based Tucker had a lucrative business in payday loans, making billions and using the money to fund an award-winning professional racing team. His illegal payday loan operations spanned more than a decade, and millions of borrowers were defrauded with additional and undisclosed fees, according to federal officials.

Tucker and his lawyer were found guilty in a separate trial criminal case in January 2018 and sentenced to more than 16 years in prison. Prosecutors in that case said Tucker cheated millions of borrowers.

Prosecutors said the interest on Tucker’s loans, with fees factored in, could fall into the triple digits. For example, a $300 loan could end up costing a borrower $975 because of renewals and rollover fees.

The $1.3 billion award was calculated through data from Tucker’s payday loan businesses. Payday loan borrowers victimized by Tucker will be receiving $505 million in checks back from the FTC. The more than a million checks will constitute the largest refund in the agency’s history. Restitution will go to borrowers who took out payday loans before January 2013.

Despite ruling against Tucker, the 9th Circuit panel did have some objections. One judge said that a jury should have decided whether the loan terms were truly deceptive, instead of a judge. Another asked in a separate opinion whether a judge should be able to hand down a judgment under the FTC Act. He recommended that a full panel review the case again. That could leave the case open to more appeals.

Tucker is currently serving time in federal prison in Leavenworth, Kansas.

For more information on payday loans, scams, cash advances, and title loans, check out our state and city financial guides including LawrenceOlatheTopeka, WichitaColumbiaIndependenceJefferson CityJoplin, Springfield, St. Louis and others.

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