FTC Resources for Reporters
Payday Lending
Many consumers who need cash quickly turn to payday loans – short-term, high interest loans that are generally due on the consumer’s next payday after the loan is taken out. The annual percentage rate of these loans is usually very high – i.e., 390% or more. In recent years, the availability of payday loans via the Internet has markedly increased. Unfortunately, some payday lending operations have employed deception and other illegal conduct to take advantage of financially distressed consumers seeking these loans.
The FTC enforces a variety of laws to protect consumers in this area. The agency has filed many law enforcement actions against payday lenders for, among other things, engaging in deceptive or unfair advertising and billing practices in violation of Section 5 of the FTC Act; failing to comply with the disclosure requirements of the Truth In Lending Act; violating the Credit Practices Rule’s prohibition against wage assignment clauses in contracts; conditioning credit on the preauthorization of electronic fund transfers in violation of the Electronic Fund Transfer Act; and employing unfair, deceptive, and abusive debt collection practices. The FTC has also filed recent actions against scammers that contact consumers in an attempt to collect fake “phantom” payday loan debts that consumers do not owe. Further, the FTC has filed actions against companies that locate themselves on Native American reservations in an attempt to evade state and federal consumer protection laws.
News Releases
- FTC Charges Payday Lending Scheme with Piling Inflated Fees on Borrowers and Making Unlawful Threats when Collecting – 04/02/2012
- FTC Charges That Payday Lender Illegally Sued Debt-Burdened Consumers in South Dakota Tribal Court Without Jurisdiction – 03/07/2012
- Court Halts Alleged Fake Debt Collector Calls from India, Grants FTC Request to Stop Defendants Who Often Posed as Law Enforcement – 02/21/2012
- FTC Settlement Bans Billing Scheme Operators from Negative-Option Sales – 02/01/2012
- Court Rules in Favor of FTC; Orders Defendants in Payday Lending Case to Pay More Than $294,000 for Illegal Garnishment of Consumers' Paychecks – 12/19/2011
- FTC Charges Marketers with Tricking People Who Applied for Payday Loans; Used Bank Account Information to Charge Consumers for Unwanted Programs – 08/01/2011
- FTC Action Leads to $4.8 Million Judgment Against Deceptive Marketer; Company Tricked Payday Loan Applicants into Buying Prepaid Debit Cards – 07/21/2011
- Consumer Reporting Agency to Pay $1.8 Million for Fair Credit Reporting Act Violations – 06/27/2011
- Loan Pitchman Permanently Banned from Telemarketing – 03/26/2010
- Internet Payday Lenders Will Pay $1 Million to Settle FTC and Nevada Charges; FTC Had Challenged Defendants' Illegal Lending and Collection Tactics – 09/21/2009
- FTC Settlement Bars Deceptive Online Marketing Tactics; Payday Loan Applicants Were Charged for Unwanted Debit Cards – 08/20/2009
- Commission Approves Final Consent Order in the Matter of We Give Loans, Inc.; FTC Approves Final Consent Order in the Matter of American Advance.com – 09/05/2008
- FTC Approves Final Consent Order in Matters of CashPro, American Cash Market, Inc., and Anderson Payday Loans – 06/06/2008
- FTC Releases Staff Comments Supporting the Defense Department’s Proposal to Protect Military Consumers from Predatory Lending Practices – 06/14/2007
- Las Vegas Firm Settles FTC Charges It Misled Consumers Through Credit Line and Cash Advance Offers – 09/6/2006
Consumer Information
- Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives
- Who’s Calling? That Debt Collector Could be a Fake
Congressional Testimony