Race car driver and loan shark Scott Tucker and associates owe the Federal Trade Commission $1.27 billion for deceptive, predatory payday lending practices:
In a decision late on Friday, Chief Judge Gloria Navarro of the federal court in Las Vegas, Nevada said Tucker was “specifically aware” that customers often did not understand the terms of their loans, and was at least “recklessly indifferent” toward how those loans were marketed.
“Scott Tucker did not participate in an isolated, discrete incident of deceptive lending, but engaged in sustained and continuous conduct that perpetuated the deceptive lending since at least 2008,” Navarro wrote.
The judge also barred Tucker from engaging in consumer lending [Jonathan Stempel, “U.S. Judge Says Racecar Driver, Others Owe $1.27 Billion in Payday Case,” Reuters via MSN.com, 2016.10.03].
Tucker will need to shut down his online lending portals, like United Cash Loans, whose fine print advertises a representative APR of 391%, and One Click Cash, which says borrowers don’t find out their interest rate until they get to the last page before they sign. According to a criminal indictment issued last February, Tucker has duped 4.5 million customers with interest rates of up to 700%. That indictment says Tucker would tell customers their $500 loan would cost them only $150 in finance charges but then charged them $1,425.
Tucker played the familiar “rent-a-tribe” game, disguising his multiple payday loan companies as tribal businesses in Nebraska and Oklahoma while maintaining his real base of operations in Overland Park, Kansas. Employees at the Overland Park office were told to lie to customers about their location. One Click Cash offers this explanation of whose laws cover its loans:
Your loan agreement will be governed by and construed in accordance with the laws of the Santee Sioux Nation of Nebraska and all applicable federal laws. Federally recognized Indian Tribes are sovereign and possess sovereign immunity and are not subject to state law absent congressional authorization. Our loan applications and loan agreements state that the laws of your state of residence and/or the state where you apply for a short term loan will not apply to any agreement you enter into with us [One Click Cash, FAQ, downloaded 2016.10.04].
On March 31, Judge Navarro froze Tucker’s assets, which included an $8-million second home in Aspen, six Ferraris, and four Porsches. The court allowed him to access first $75,000 for two months of living expenses, then $8,000 a month. Tucker apparently abused even that generous agreement. The asset freeze also forced Tucker to switch to court-appointed attorneys.
As Steve Hildebrand, sponsor of the 36% rate cap on payday loans on South Dakota’s ballot, said at the September 15 ballot question forum, payday loan sharks do not contribute meaningfully to South Dakota’s economy. The loan sharks pay pittance wages to employees required to engage in deceptive practice. The loan sharks raid the paychecks of low-income workers who would otherwise spend their every dollar in local stores boosting our economy. The loan sharks then export their money from South Dakota to buy extravagant homes, race cars, jets, and other luxuries purchased on the exploitation of people in desperate situations.
Given such predatory (and, in Tucker’s case, criminal) behavior, we should feel no moral compunction about putting Tucker and other payday lenders out of business by voting Yes on IM 21 and No on Amendment U.