Judge: Kansas City payday lender set to repay $132.5 million
KANSAS CITY, Mo. (AP) — A judge has recommended that a Kansas City payday lender pay $132.5 million in restitution to borrowers it is accused of duping.
The administrative law judge recently made the recommendation in the Consumer Financial Protection Bureau v. Integrity Advance case, the Kansas City Star reported. Friday. The judge also ruled that the company and its chief executive, James Carnes, should pay $7.5 million and $5 million, respectively, in civil penalties.
The federal watchdog says Integrity Advance misled borrowers about how much it would cost to repay the loans. Borrowers were given the impression in loan agreements that a $300 loan would cost $390 to repay, the agency said. But the loans have been set up to renew automatically, which means that unless a borrower takes certain steps to repay the loan all at once on the first due date, a $300 loan could cost nearly $1,100. $.
The agency said the payday loan company was also making unauthorized withdrawals from borrowers’ bank accounts.
Lawyers for Carnes and the company on Thursday filed an appeal of the judge’s recommendation. The appeal cites a Supreme Court ruling earlier this year that found the structure of the Consumer Financial Protection Bureau to be unconstitutional and that its director could be removed by the president.