Justice Department cracks down on $220 million “predatory” payday lending scheme
Businessman convicted on six counts of fraud, including wire fraud and aggravated identity theft.
The US Department of Justice has found a Kansas City businessman guilty of fraud after issuing $220 million worth of loans with illegal interest rates to hundreds of thousands of consumers between 2004 and 2014.
A federal NY jury found Richard Moseley of Kansas City, Missouri guilty of undervaluing costs, overcharging customers and making unauthorized loans to more than 620,000 Americans over a ten year period.
Reuters reports that some of the annual interest rates charged to customers exceeded 700%.
Moseley, who pleaded not guilty, was convicted on six counts of fraud, including wire fraud and aggravated identity theft. He faces up to 20 years behind bars and is scheduled to appear April 27, 2018 for sentencing.
Prosecutors said Moseley spent millions on a holiday home in Mexico, luxury cars and country club dues.
US authorities have recently been cracking down on illegal and unfair payday loan schemes.
A payday loan is a short-term form of credit that can get you cash quickly even if you have bad credit or a low income. Because of their speed and lax requirements, payday loans typically have a high annual interest rate.
New consumer protections have been created to ensure potential borrowers can afford to repay their debts before being approved for payday loans, where lenders provide cash on the basis it’s repaid in one lump sum.
The Consumer Financial Protection Bureau (CFPB) finalized a rule to prevent roll over charges and refinancing on payday loans, auto title loans, deposit advance products, and longer-term loans with balloon payments.
Traditionally, payday loans had to be repaid in one lump sum on your next payday. However, these days you can source lenders hawking larger payday loans with terms as long as six months.
More than four out of five payday loans are re-borrowed within a month, typically when the loan is due or shortly thereafter. Almost one-in-four initial payday loans are re-borrowed nine times or more, with the borrower coughing up more in fees than they received in credit.
Need some cash to bridge the gap until your next payday? Learn about payday loans and compare providers.