Appeals Court Upholds $1.3 Billion Fine Against Payday Loan Scammer

The Court of Appeals for the Ninth Circuit has upheld a lower court’s summary judgment ruling in favor of the Federal Trade Commission against Scott Tucker, who was convicted and sentenced to nearly 17 years in prison and ordered to repay nearly $1.3 billion as a result of his role in a payday lending scam.

Tucker and his companies had appealed the ruling, arguing that individuals would not have been deceived by the forms individuals were required to fill out in order to obtain a loan from the defendants.

A copy of the ruling in FTC v. AMG Capital Management, LLC et al can be accessed by clicking here.

Tucker was charged with illegally accessing the bank accounts of individuals and withdrawing interest payments on payday loans, but not taking out any money to pay down the principal. Tucker is also facing charges for filing a false tax return. Tucker’s operation tried to hide behind sham relationships with Native American tribes that Tucker used to try and shield his companies from prosecution. Some of the payday lending companies operated by Tucker charged interest rates in excess of 700%.

Individuals who took out a loan from one of Tucker’s companies were forced to take affirmative action three business days before a payment was due if they wanted to pay off the total amount owed, rather than make a regularly scheduled payment. Based on a hypothetical loan amount of $300 and a finance charge of $90, an individual would be forced to pay as much as $975 instead of $390 if he or she failed to perform the required steps in the proper order.

Tucker argued that the terms were not deceptive because they were “technically correct.” The Appeals Court did not give any weight to the technicalities of his scam.