The Payday Loan Scam

There’s an interesting documentary series on Netflix titled Dirty Money. Each episode explores an issue relating to corporate greed. I’m not recommending the whole series (the first episode takes a low blow at The Donald for pulling us out of the Paris Climate Agreement), but the second episode is about a payday loan scandal with some larger implications.

The Scandal

Wealthy elitist Scott Tucker created an umbrella company under the ownership of a Native American tribal chief from Oklahoma. He did this to avoid state laws. The chief agreed to lend his name to this company in exchange for a whopping 1% of profits without having to do anything. All of the payday loan companies under the umbrella company operated out of Kansas and took customers from the internet. When angry customers called the offices employees there said they were located in a reservation in Oklahoma.

payday loans

Scott Tucker with one of the race cars taken from him after he was found guilty

The payday scam is simple. If a guy takes a payday loan for $500 he’ll have to payback a ridiculous amount like $650. The guy knows that and takes the hit. What he doesn’t know is that the loan company is going to take $75 every two weeks from his account to “hold the loan,” none of which counts toward the $650 he’s willing to pay. After two months the loan company starts taking the $75 to “hold the loan” plus $100 of principal and an additional $30 service fee.

In the lawsuit brought against Tucker the prosecution was able to show that the loan agreements the loan-takers were seeing were extremely misleading. Customers did not know they were making all those payments to “hold the loan”, none of which paid off the principal. That’s one of the ...

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