Scott Tucker’s $ 1.3 billion payday loan fine upheld by appeals court
A San Francisco appeals court upheld a lower court ruling on Monday that Kansas City payday loan mogul Scott Tucker cheated borrowers and owes pay a record $ 1.27 billion to the Federal Trade Commission.
But some of the appeals court judges expressed reservations about the court’s authority to pronounce such a restitution judgment.
Tucker quietly built a business empire in Kansas City by granting payday loans at outrageous rates and fees. The former Leawood resident then turned that fortune into a career as a professional race car driver.
A jury last year Tucker convicted of operating illegal payday loan business and he is currently serving a sentence of 16 years and eight months in prison. Jurors have found Tucker and his attorney, Tim Muir, guilty of charging illegal interest rates on deceptively term loans, among other offenses.
Prior to his criminal conviction, the FTC sued Tucker and his companies, claiming his company’s loan terms were misleading.
In 2016, a Nevada federal judge found the FTC’s arguments compelling and ordered Tucker and his companies to pay $ 1.27 billion, the highest amount the FTC has won in a contentious case. Tucker was also ordered to stay away from payday lending business.
Tucker appealed the decision soon after.
A three-judge panel of the 9th Circuit Court of Appeals heard arguments from attorneys for Tucker and the FTC. The judges largely agreed that the loans from Tucker’s businesses were misleading. The opinion, written by the judge of the 9th circuit Diarmuid O’Scannlain described a confusing and cumbersome method of repaying a loan.
The loan terms describe in large print how a loan of $ 300 would cost a borrower $ 390. But that is only if consumers took a number of unusual steps to pay off the loan in full in order to avoid renewing the loan. Without reading or fully understanding the fine print and then taking a number of steps to repay the loan, the opinion is that borrowers risked paying up to $ 975 for a $ 300 loan through renewals and fees. renewal.
But one of the three judges, Carlos Bea, wrote in a separate opinion that he had read the terms of the loan, understood them and felt that the question of whether the terms were “likely to deceive” a borrower should have be left to a jury or judge. judge in a trial. The Nevada judge hearing the Tucker case ruled in favor of the FTC on summary judgment.
O’Scannlain, in a separate opinion, also questioned whether courts can order restitution judgments under FTC law. He suggested that a full 9th Circuit panel re-examine the Tucker case, indicating that the case has a good chance of being re-examined by the appeals court.
Tucker, 56, is currently in prison at Leavenworth. The Bureau of Prisons sent him to a Colorado jail to serve his sentence, but he remains in Leavenworth as a criminal tax case is pending against him in Kansas – a case in which he and another lawyer are charged for not having declared millions of dollars in income. .