A San Francisco appellate court ruled that the $1.27 billion fine imposed by the Federal Trade Commission against a Kansas City payday loan businessperson would stand.
Scott Tucker was accused of deceiving borrowers in an illegal payday loan scheme and was ordered to pay the FTC fine and sentenced to 16 years in prison.
Still, some appellate court judges questioned the court’s authority to render such a judgment.
A jury found Tucker guilty for his operation of the illegal payday loan company and is currently in the Leavenworth prison. Tucker, along with his attorney, Tim Muir, was found guilty of charging prohibited interest rates on loans, which also had ambiguous terms and other things.
Before Tucker was convicted, the FTC sued him and the business, saying the loan terms were misleading. In 2016, a Nevada federal judge listed to the FTC’s arguments and ordered him to pay the $1.27 billion fine. It was the largest FTC amount ever awarded. He was also told he could not operate a business in the payday loan lending industry again.
Tucker appealed the decision, but a panel of three 9th Circuit Court of Appeals judges listened to the FTC and Tucker’s lawyers. The judges agreed that Tucker’s loan terms were deceptive, which made it confusing for people trying to repay a loan.
According to loan terms (in large print), a $300 loan would cost borrowers $390 but if only they paid the loan back in full without any loan renewals or rollover fees. If not, they could pay $975 total on the original $300.
Carlos Bea, one of the three judges, wrote he read the terms and understood them but felt it was up to a jury – not a judge – to decide if a borrower was being deceived or not.
The 56-year-old man is waiting to be transferred to the Colorado prison system but is facing a criminal tax case in Kansas first. He is accused of failing to report millions of dollars in income.