Payday lenders charged near Kansas City; federal laws needed to halt abuses
Posted: Feb. 17, 2016 12:01 am
TWO BUSINESSMEN and a lawyer from the Kansas City area face racketeering and other charges stemming from payday loan operations that charged exorbitant interest rates and fees.
Diego Rodriguez of the FBI said Richard Mosely, Scott Tucker and Tucker's attorney, Timothy Muir, were in court last week to answer indictments that include violation of the U.S. Truth in Lending Act and usury laws in several states. At least eight other people already have been charged in similar cases in the Kansas City area.Missouri payday loan operators charge an average annual interest rate of 455 percent. Indictments allege that Tucker, an American Le Mans champion racer, owned businesses that charged up to 700 percent interest on some loans.Those predatory rates were imposed on people in desperate financial circumstances, many of whom could least afford the high rates.One of the most damning accusations in the indictment against Mosely concerns people whose bank accounts were reportedly accessed even though they had no loans at the time. Federal investigators also allege that some customers who granted access to their bank accounts were only charged interest, leaving the principal untouched as the overall debt ballooned out of control.Unscrupulous loan operators, doing business under a variety of names, find that some states have few rules that would curb their excesses. Utah is one such state where a database shows 8,000 lawsuits were filed there by payday or title loan companies during the fiscal year that ended June 30, 2015. Many of those customers were forced into bankruptcy.Storefront loan operators often make the case that their customers need their services because traditional banks don't offer micro-loans of less than $1,000. Many of the customers also may lack the credit ratings to qualify for other forms of financing.Those benevolent images tend to evaporate when customers enter spirals of debt and threats and see their credit ratings destroyed by those friendly storefront lenders.It has been nearly a year since President Barack Obama and the Consumer Financial Protection Bureau called for national rules to replace an uneven patchwork of state laws that leave too many people paying triple-digit interest rates. Lawmakers need to adopt strict limits on usury charges and insist on jail time for lenders who are found guilty of unauthorized bank tampering.