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    FTC Seeks $1.3B From Race Car Driver Over Payday Loans

    Thursday, January 21st, 2016

    FTC Seeks $1.3B From Race Car Driver Over Payday Loans

    By Hannah Sheehan

    Law360, New York (January 20, 2016, 11:53 PM ET) — The Federal Trade Commission urged a Nevada federal judge Wednesday to order race car driver Scott Tucker to pay $1.3 billion in equitable monetary relief after two companies affiliated with Tucker and now owned by three Native American tribes agreed to a record $21 million settlement over unlawful payday loans.The FTC told the court that Scott Tucker and his now deceased brother Blaine ran a payday lending enterprise for over 10 years that deceived consumers by materially misstating the cost of loans issued by various companies with ties to the brothers, including AMG Services Inc. and MNE Services Inc., before transferring ownership to three Native American tribes.

    “Even after nominally transferring the payday lending business to the three tribes, Scott Tucker and Blaine Tucker continued to control, participate in and benefit from the so-called ‘tribal’ payday lending operation,” the FTC said in a memorandum.

    The agency, which is also seeking to permanently ban Scott Tucker from engaging in consumer lending activities, argued that the brothers are personally liable for the companies’ illegal lending and collection practices, claiming the pair had direct involvement and knowledge of the misconduct, as well as the authority to control it.

    The FTC called the $1.3 billion sum conservative in view of the defendants’ failure to produce data on loans issued before 2008. The agency said it arrived at the figure by calculating the difference between the disclosed costs of loans issued by the Tuckers’ companies and the amount they actually took from borrowers, court documents show.

    According to the memorandum, Blaine Tucker committed suicide on March 9, 2014, but the FTC said its claims survive against his estate. His widow and executor Nereyda Tucker has been substituted as a defendant by court order.

    Two of the companies affiliated with the brothers, AMG Services and MNE Services, recently agreed to pay the FTC $21 million — which the FTC says is its largest-ever payday lending settlement — to end allegations that they charged customers undisclosed and inflated fees in violation of the FTC Act.

    The FTC asserted that the payday lending companies violated the FTC Act by misleading customers on how much loans would cost. For example, a contract stated that a $300 loan would cost $390 to repay, but customers were then charged $975 in repayments, the agency said.

    The FTC also alleged Truth In Lending Act violations for inaccurately disclosing annual percentage rates and loan terms.

    The $21 million settlement will be paid into a fund administered by the FTC that will be used for equitable relief and consumer compensation, court documents show.

    Counsel for the parties did not immediately respond to requests for comment Wednesday.

    Scott Tucker is represented by Von S. Heinz of Lewis Roca Rothgerber LLP.

    The FTC is represented by Nikhil Singhvi.

    The case is FTC v. AMG Services Inc, et al.,  case number 2:12-cv-00536, in the U.S. District Court for the District of Nevada.

    Title Loan Company d/b/a Loan Machine

    Friday, January 15th, 2016

    Please contact us if you live in Illinois and have a line of credit from the Title Loan Company d/b/a Loan Machine.

    Lumosity to Pay $2 Million to Settle FTC Deceptive Advertising Charges for Its “Brain Training” Program

    Tuesday, January 5th, 2016

    Company Claimed Program Would Sharpen Performance in Everyday Life And Protect Against Cognitive Decline

    Lumosity logo, a brain inside a head with rays emanating from itThe creators and marketers of the Lumosity “brain training” program have agreed to settle Federal Trade Commission charges alleging that they deceived consumers with unfounded claims that Lumosity games can help users perform better at work and in school, and reduce or delay cognitive impairment associated with age and other serious health conditions.

    As part of the settlement, Lumos Labs, the company behind Lumosity, will pay $2 million in redress and will notify subscribers of the FTC action and provide them with an easy way to cancel their auto-renewal to avoid future billing.

    “Lumosity preyed on consumers’ fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer’s disease,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But Lumosity simply did not have the science to back up its ads.”

    According to the FTC’s complaint, the Lumosity program consists of 40 games purportedly designed to target and train specific areas of the brain. The company advertised that training on these games for 10 to 15 minutes three or four times a week could help users achieve their “full potential in every aspect of life.” The company sold both online and mobile app subscriptions, with options ranging from monthly ($14.95) to lifetime ($299.95) memberships.

    Lumosity has been widely promoted though TV and radio advertisements on networks including CNN, Fox News, the History Channel, National Public Radio, Pandora, Sirius XM, and Spotify. The defendants also marketed through emails, blog posts, social media, and on their website, Lumosity.com, and used Google AdWords to drive traffic to their website, purchasing hundreds of keywords related to memory, cognition, dementia, and Alzheimer’s disease, according to the complaint.

    The FTC alleges that the defendants claimed training with Lumosity would 1) improve performance on everyday tasks, in school, at work, and in athletics; 2) delay age-related cognitive decline and protect against mild cognitive impairment, dementia, and Alzheimer’s disease; and 3) reduce cognitive impairment associated with health conditions, including stroke, traumatic brain injury, PTSD, ADHD, the side effects of chemotherapy, and Turner syndrome, and that scientific studies proved these benefits.

    The complaint also charges the defendants with failing to disclose that some consumer testimonials featured on the website had been solicited through contests that promised significant prizes, including a free iPad, a lifetime Lumosity subscription, and a round-trip to San Francisco.

    The proposed stipulated federal court order requires the company and the individual defendants, co-founder and former CEO Kunal Sarkar and co-founder and former Chief Scientific Officer Michael Scanlon, to have competent and reliable scientific evidence before making future claims about any benefits for real-world performance, age-related decline, or other health conditions.

    The order also imposes a $50 million judgment against Lumos Labs, which will be suspended due to its financial condition after the company pays $2 million to the Commission. The order requires the company to notify subscribers who signed up for an auto-renewal plan between January 1, 2009 and December 31, 2014 about the FTC action and to provide a means to cancel their subscription.

    The Commission vote authorizing the filing of the complaint and proposed stipulated order was 4-0, with Commissioner Julie Brill issuing a separate concurring statement. The FTC filed the complaint and proposed order in the U.S. District Court for the Northern District of California, San Francisco Division.

    The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Council’s goal of increasing the number of Americans who are healthy at every stage of life. This case is part of the FTC’s ongoing efforts to protect consumers from misleading health advertising

    FTC Secures $4.4 Million From Online Payday Lenders to Settle Deception Charges

    Tuesday, January 5th, 2016

    Lenders Will Waive $68 Million in Inflated Fees Charged to Consumers Nationwide

    Two payday lenders have settled Federal Trade Commission charges that they illegally charged consumers across the country undisclosed and inflated fees. The two companies, Red Cedar Services Inc. and SFS Inc., have each paid $2.2 million and collectively waived $68 million in fees to consumers that were not collected.

    Combined with earlier settlements, the FTC has recovered about $25.5 million thus far in connection with the case, which involves Red Cedar, SFS, AMG Services, Inc., and MNE Services, Inc., and a number of related entities and individuals.  The case also has resulted in an estimated $353 million in waived debt – making this already the largest FTC recovery in a payday lending case, with litigation still continuing against other defendants.

    “Payday lenders need to be honest about the terms of the loans they offer,” said Jessica Rich, Director of the Bureau of Consumer Protection. “These lenders charged borrowers more than they said they would. As a result of the FTC’s case, they are paying a steep price for their deception.

    The settlements stem from FTC charges filed in federal court in April 2012 alleging that the lenders and others misrepresented how much loans would cost consumers, in violation of the FTC Act. For example, a contract used by Red Cedar, AMG Services and MNE Services stated that a $300 loan would cost $390 to repay, but they charged consumers $975.

    The defendants also failed to accurately disclose the annual percentage rate and other loan terms, in violation of the Truth in Lending Act (TILA), and made preauthorized debits from consumers’ bank accounts a condition of the loans, in violation of the Electronic Funds Transfer Act (EFTA). Red Cedar and SFS operated under the trade names 500 Fast Cash and One Click Cash, respectively.

    In May 2014, the federal court found that the defendants’ loan documents were deceptive and violated the TILA, as the FTC had charged.

    The stipulated final federal court orders for Red Cedar and SFS also prohibit those defendants from misrepresenting the terms of any loan product, including the payment schedule and interest rate, the total amount the consumer will owe, annual percentage rates or finance charges, and any other material facts. The orders also bar defendants from violating the TILA and the EFTA.

    The Commission votes approving the proposed stipulated final orders for Red Cedar and SFS were 4-0. The U.S. District Court for the District of Nevada entered the orders on November 25, 2015.

    The Commission previously reached court-approved settlements with AMG Services, MNE Services, Robert D. Campbell, Troy LittleAxe, and Don Brady. Litigation continues against AMG Capital Management LLC, Level 5 Motorsports LLC, LeadFlash Consulting LLC, Black Creek Capital Corporation, Broadmoor Capital Partners LLC, Scott A. Tucker, the estate of Blaine A. Tucker, and relief defendants Park 269 LLC and Kim C. Tucker.