THE BLOG

19
Feb

Netflix Scott Tucker Dirty Money: Tribe Payday Loans

The Business of Lending Money to the Masses

The Business of Lending Money to the Masses

In October 2017, Scott Tucker was criminally convicted for his billion-dollar payday loan business. On Friday, he was sentenced to 16 years in prison. (Tucker’s attorney, Tim Muir, received 7 years.)

“As a unanimous jury found today, Scott Tucker and Timothy Muir targeted and exploited millions of struggling, everyday Americans by charging them illegally high interest rates on payday loans, as much as 700 percent,” Joon H. Kim, acting Manhattan U.S. Attorney, said in a statement. “Tucker and Muir sought to get away with their crimes by claiming that this $2 billion payday loan business was actually owned and operated by Native American tribes. Scott and his lawyer attempted to portray their Kansas City based AMG services as Native American owned; thereby having sovereign immunity. The jury disagreed.

Tribe payday loan business

Scott Tucker Payday Loan Business – Tribe Lenders

A lawyer for Tucker told said Scott  Tucker intends to appeal. Tucker is also appealing the $1.3 billion fine leveled against him last year by the Federal Trade Commission.

Meanwhile, Tucker is off to prison for 16 years!

The fact is, Scott Tucker’s payday loan business had thousands of returning borrowers! Why? Because they preferred Scott’s online payday loan product to the few options they had for borrowing a few hundred bucks without a hassle.

It’s true that Tucker employed MANY “tricks” and disclosure failures during the course of his customer’s online borrowing transaction. Too bad! Lenders don’t really have to do this. A lender can reveal ALL the costs, terms and transaction details BEFORE the potential borrower actually “signs on the dotted line” and still build a multi-million dollar loan portfolio. Many publicly traded and privately held companies are achieving this as I type here.

Tribal ownership? It appears that Scott Tucker and Timothy Muir accomplished this “after the barn doors were opened!” Their handling of this arrangement appears to have resulted in their mortal death. (They should have consulted with an experienced tribal chairman/manager like Allen Parker at Consultants4Tribes.com!)

How to start a loan businessRegarding the payday loan product offering itself, the media ALWAYS fails to disclose that there is more to the 700% interest rate they ALWAYS refer to than first meets the eye. This is an annualized interest rate required to be disclosed by the lender to a customer by the FED’s. By now, everyone knows that these loans aren’t meant to be rolled over every 2 weeks for years! They are scheduled to be paid off on the borrower’s next payday. You borrow $300 and payback $345. No big deal IF you have zero options and you want  a fast loan!

Scott Tucker screwed up! But of course, that’s easy for the rest of us to conclude having the benefit of hindsight! Tucker was a maverick; blazing new trails. As he says in the Netflix “Dirty Money,” Episode 2 treatise on his business, “There was no road map.”

 

16
Feb

Madden v. Midland Funding Fix for Lenders and Debt Buyers: Huge Deal!

THIS IS HUGE! A fix for Madden v. Midland Funding! This has serious implications for all lenders. That includes tribes, online lenders, B & M’s…

This is a portion of a guest post written by Scott Stewart, CEO of the Innovative Lending Platform Association  on LendAcademy operated by Peter Renton; a great blog and an excellent Podcast you should be dialed into! (NOTE: As you read this, realize that consumer debt is impacted as well. For now, it appears to be borrowers in NY, VT and CT with more states coming!)

“Imagine you opened a salon two years ago with a chair for both you and your business partner.  Over the years, you built a small clientele and grew steady revenues.  Your business is profitable, and you want to add two more chairs to your shop.  You estimate that the expansion will cost $20,000 but will yield $40,000 annually in new revenue.

Together, you discuss taking out a small business loan with both large and small banks, but they turn you down citing your 640 personal credit score and the lack of two years of business tax returns as the reason for the decline.  So, you reach out to online lenders in the hopes of securing the capital you need to expand and grow your business. [Continued below…]

 

How to start a loan businessAfter reviewing your application, an online lender offers your business a $20,000 loan that can be funded in a day and paid back in weekly installments over a six-month period.  The APR seems high – it’s about 40% – but the total cost of capital is only $2,115.  That means you’ll pay $2,115 to borrow $20,000 to fuel your expansion, and that expansion is expected to yield a $40,000 return on your investment.  You and your partner decide to seize the opportunity.

Unfortunately, a recent decision by the Second Circuit Court of Appeals in Madden vs. Midland Funding, is making it difficult for online lenders to offer businesses the funds they need to grow and succeed.  The Madden decision undermined the legal doctrine known as “valid when made,” which has been a cornerstone of banking law for over 100 years.  The principle is simple.  If a loan is legal with respect to its interest rate, then it does not become invalid or unenforceable when sold to another party.  Numerous bi-partisan and non-partisan groups have come out in opposition to the Madden decision, in part because of the dangerous uncertainty it has inserted into the financial markets that are critical to supplying credit to individuals and small businesses.”

Peter Renton also wrote about the impact of Madden v. Midland in an earlier Post on Lend Academy:

There was a long discussion about the impact that this decision has had on borrowers in Second Circuit states: NY, VT and CT. Research has been done by Columbia University and others that show lending is down significantly in the three states and one panelist noted that “no marketplace lending platform is issuing loans in these states to borrowers under a 625 FICO.” If for some reason the Madden decision was to be expanded to all states then lending platform volume could drop as much as 50%.

Recently, the United States Congress passed the “Protecting Consumers’ Access to Credit Act of 2017 (HR 3299), otherwise known as the “Madden Fix” bill.

This bill would restore the “Valid when Made” doctrine meaning that if a loan was valid when it was made it does not become invalid when assigned to another party regardless of state usury laws.

In 2015, a Second Circuit panel in Madden v. Midland Funding, LLC overturned a district court’s holding that the National Bank Act (NBA) preempted state law usury claims against purchasers of debt from national banks. (See Special Alert on Second Circuit decision here.) The appellate court held that state usury laws are not preempted after a national bank has transferred the loan to another party.

It passed the house by a margin of 245 – 171 so it successfully picked up support from Democrats!

Lets hope this bill gets through the Senate in tact.

And, if you want to learn how to start a loan business that focuses on signature loans, car title loans, single-payment loans (payday), line-of-credit lending… start here:

“How to Loan Money to the Masses.”

Jer at PaydayLoanUniversity.com

08
Feb

U.S. Bancorp Reveals $608M Scott Tucker Liability

The Business of Lending Money to the Masses

The Business of Lending Money to the Masses

As previously disclosed, the Company U.S. Bancorp is working to resolve matters with regulatory agencies, including the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network, relating to their review of the legacy Bank Secrecy Act/anti-money laundering compliance program of U.S. Bank National Association (“U.S. Bank”).

Resolution of these regulatory matters is expected to include payment of civil money penalties. Also as disclosed, a legacy banking relationship between U.S. Bank and payday lending businesses associated with former customer Scott Tucker (who was convicted of fraud charges on October 13, 2017) has been the subject of an investigation by the U.S. Attorney’s Office in Manhattan.

That investigation also has covered issues related to the adequacy and effectiveness of U.S. Bank’s legacy Bank Secrecy Act/anti-money laundering compliance program. The parties are currently working on a definitive settlement, which the Company currently expects to include a deferred prosecution agreement and payment of a penalty, which the Company expects to finalize soon. Based on the current status of these various matters, the Company has accrued a liability of $608 million, which is reflected in the Company’s financial results for the quarter ended December 31, 2017.

The settlement of these matters is subject to negotiation and completion of final documentation and approval by the Company and the relevant agencies, and therefore the final terms of the settlements may differ from the Company’s current expectations.

In addition, as previously disclosed, the Company remains subject to other ongoing examinations, inquiries and investigations by government agencies and bank regulators, including a review by the Board of Governors of the Federal Reserve System of economic sanctions and related compliance matters, any of which could result in administrative proceedings, monetary fines or other penalties.

U.S. Bancorp disclosed in a January filing with the Securities and Exchange Commission that its dealings with Tucker were the subject of an investigation by the U.S. Attorney’s Office in Manhattan, N.Y. That’s the same U.S. Attorney’s office that brought racketeering charges against Tucker. Scott Tucker was was convicted of those charges Oct. 13.

 

 

06
Feb

Indiana Payday Loans and Laws

 

How to start a loan business

How to start a loan business

Payday loan lenders in Indiana will likely experience increased transaction volume and profitability as a result of Indiana’s move to pass new laws allowing payday loan lenders to charge fees three times the existing rates previously in place.

Basically, Indiana legislators will establish longer-term payday loans for between $605 and $1,500.

Payday loan state law required that loans not exceed interest rates of 72 percent per year. But, by enabling shorter length payday loans for 7-14 days, payday lenders can offer consumers more choices for handling financial emergencies.

This is great news for consumers in Indiana!

Indiana payday loan lenders employ “unsecured consumer installment loans.” APR’s (Annual Percentage Rates) tier up to approx. 222 percent.

Indiana payday loans range from three  to 12 months with loan principals of $605 to $1,500.

As an example,  a 3 month payday loan – installment loan –  having a loan principal of $605 results in the payday loan borrower paying $144 in monthly maintenance fees and $91 in a “nonrefundable original fee.” Total payday loan payback is $840. (Beats asking friends or family for money!)

Bottom line: these Indiana payday loans will provide residents of Indiana more financial choice when facing emergencies.

Licensed Indiana payday loan lenders are barred from charging more than 20 percent of the borrower’s monthly gross income and an Indiana payday loan borrower can have one installment loan at a time.

What do you think about the new business opportunity for entrepreneurs to loan money to the masses in Indiana? Email Jer@PaydayLoanUniversity.com

Want to start a loan business in Indiana? Learn how here: PaydayLoanUniversity.com

How to start a loan company

How to start a loan company

02
Feb

How to Start a Car Title Loan Business: Bill of Sale

How to Start a Car Title Loan Business: visit PaydayLoanUniversity.com for more tactics and strategies…

States Requiring Approved Bill of Sale

Many states/provinces require a state-specific bill of sale form. In this case, you must fill out the bill of sale form offered by the motor vehicle agency in your state. The list below lists states that require and provide a specific type of bill of sale form when you buy or sell a vehicle. Note, check YOUR state/province for updates often:

NOTE these links are to a PRIVATELY OWNED WEBSITE. NOT the DMV!

For specific tactics & strategies for starting & successfully operating a title loan business, visit: http://www.AutomobilePawn.com and http://www.paydayloanuniversity.com/