The U.S. Federal Trade Commission has brought a joint action with the state of Nevada charging 10 related Internet payday lenders and their participants with failing to disclose key loan terms, and using abusive and deceptive collection tactics.

The lenders, based primarily in the United Kingdom, used a series of websites such as, to promise consumers loans of as much as $500 within 24 hours, the FTC said. The loans were offered without requiring a credit check, proof of income or documentation, the agency said. However, consumers were required to provide their bank account information and social security numbers.

Applicants were told their loan had to be repaid by their next payday, along with fees that ranged from $35 to $80. If the loan was not repaid, it automatically would be extended and an extra fee would be debited from the consumer’s bank account. Consumers were required to provide access to their bank accounts for payment of the fees.

In a complaint filed in the U.S. District Court for the District of Nevada, the FTC alleged that the defendants did not disclose key terms in writing, including the annual percentage rate, the payment schedule, the amount financed, the total number of payments, and late payment fees. Consumers who asked to see the loan terms in writing either were told the transaction was oral, or were told the terms would be sent to them but they never received the requested information.

The FTC said many consumers paid hundreds of dollars above their loan amounts before cutting off access to their bank accounts. The defendants threatened consumers with arrest, lawsuits, property seizure and wage garnishment, the agency said. They called consumers, as well as their coworkers and employers at their workplace; used abusive language; and disclosed the consumers’ purported debts.

The loans extended did not comply with the payday lending laws in many consumer states, and the defendants were not licensed to make consumer loans in those states, the FTC said. The defendants are charged with violating the Truth in Lending Act, using unfair and deceptive tactics under the FTC Act, and other charges.

Why This Matters:  Amid the current economic crisis, regulators are likely to scrutinize lending practices and the marketing practices used by lenders.