Judge rules on reach of FTC Act
When the FTC sued payday lender AMG Services in 2012, the complaint charged the defendants with a host of deceptive and unfair practices aimed at consumers already struggling to make ends meet. Undisclosed fees and debt collection calls that threatened arrest were just a few of the allegations. The defendants countered with an interesting defense: that their affiliation with American Indian tribes rendered them beyond the reach of the FTC Act. A U.S. Magistrate Judge rejected those arguments and a recent decision by a U.S. District Judge in Nevada affirmed those findings.
The AMG defendants had raised similar defenses in state legal proceedings charging them with consumer protection violations. In the FTC case, AMG claimed that the FTC lacked authority to enforce the FTC Act, the Truth in Lending Act (TILA), and the Electronic Funds Transfer Act (EFTA) against tribes and tribal businesses. But citing the “broad reach” of the FTC Act, the Magistrate Judge held that the FTC had “authority to bring suit against Indian Tribes, arms of Indian Tribes, and employees and contractors of arms of Indian Tribes.” He found that the FTC had the authority to bring the TILA and EFTA claims, too. On March 7, 2014, U.S. District Judge Navarro affirmed those conclusions.
Separately, the FTC reached a settlement with most of the defendants, prohibiting them from using deceptive debt collection tactics and from violating EFTA. Other portions of the case remain pending, including allegations that the defendants piled on undisclosed charges, thereby deceiving consumers about what a loan would cost, in violation of the FTC Act and TILA. In a separate decision earlier this year, the Magistrate Judge ruled in favor of the FTC on those issues. That ruling is now before Judge Navarro.