Online payday lenders face payback with federal litigation
To its chagrin, the Kansas City area has become a hotbed for abusive online payday loan operations. A couple of dozen or more area businessmen have made quick fortunes by offering short-term cash to low-income consumers and then slamming them with ruinous interest rates and fees.
The amount of money to be made by trapping people into endless debt is mindboggling. One Johnson County businessman sold his internet payday loan business for $50 million in 2012. Scott Tucker of Leawood, the most notorious of the online lenders, used his earnings to finance a fleet of race cars, a private Learjet and an $8 million vacation home in Colorado.
Payday for at least some of these lenders may be coming to an end, however. A number of federal agencies are cracking down on unscrupulous practices. And none too soon.
Responding to a lawsuit brought by the Federal Trade Commission, U.S. District Judge Dean Whipple has issued a temporary restraining order against companies controlled by Johnson County businessmen Timothy A. Coppinger and Frampton T. Rowland III.
The lawsuit accuses the men of conducting a “deceptive and unfair online payday lending scheme, which is replete with unlawful
Another lawsuit. brought by the federal Consumer Financial Protection Bureau, aims to shut down the Kansas City-based operations of the Hydra group. It is controlled by Richard F. Moseley; his son, Richard F. Moseley Jr. and Christopher J. Randazzo.
The FTC suit claims that companies controlled by Coppinger and Rowland purchased sensitive financial data of prospective consumers and, in some cases, issued phony loans to people who had never agreed to borrow the money. The defendants are accused of generating bogus loan agreements to deceive banks and of withdrawing money from consumers’ accounts.
In one 11-month period, Coppinger and Rowland’s network made loans of about $28 million and took back more than $46.5 million, according to the FTC.
In an awkward twist, some of the ill-gotten gains reaped by online lenders have benefited schools, churches and other area philanthropic causes.
But payday loan operations are toxic enterprises, and it’s to Kansas City’s detriment that they received the financial and technical support to thrive here. The area should make amends by pooling its resources and coming up with a fair way to help low-income and “unbanked” consumers get access to emergency cash.Source: www.kansascity.com
Category: Payday loans