On October 4, 2016, the Federal Trade Commission (FTC) announced that the U.S. District Court for the District of Nevada issued an order requiring that a racecar driver and several corporate defendants pay $1.3 billion in relation to a Kansas City-based payday lending scheme. The order also bans the individual and his companies from any future aspect of consumer lending, and prohibits them from conditioning the extension of consumer credit on preauthorized electronic fund transfers, misrepresenting material facts about any good or service, and engaging in future illegal debt collection practices. According to the FTC, the judgment represents “the largest litigated judgment ever obtained by the FTC.”
The court issued the $1.3 billion order as part of a September 30 ruling that granted the FTC’s motion for summary judgment. The court determined that the racecar driver ran the operation and was responsible for the unlawful conduct.
The FTC originally filed the complaint initiating this action in 2012, alleging that the defendants violated Section 5 of the FTC Act by deceiving consumers nationwide and illegally charging them undisclosed and inflated fees. Specifically, it alleged that the defendants made multiple withdrawals from consumer accounts and assessed finance fees each time without disclosing the costs of the loan. The $1.3 billion judgment represents the amount the court determined to be the difference between what consumers were told they would pay and what they actually paid on the loan.