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FTC Charges Three Internet Payday Lenders with Not Disclosing Required APR Information in Ads

FTC Charges Three Internet Payday Lenders with Not Disclosing Required APR Information in Ads

February 27, 2008

Three payday lenders have agreed to settle Federal Trade Commission charges that their Internet advertising stated the cost of loans without disclosing annual percentage rate information that federal law requires. This information helps consumers compare the costs of these payday loans to other payday loans and to alternative forms of short-term credit. The settlements require that the lenders must disclose the annual percentage rate in similar loan ads in the future.

According to the FTC’s complaints, American Cash Market, Inc. and Anderson Payday Loans, both based in California, and CashPro d/b/a, based in Nevada, stated loan costs on their Web sites – a $20 fee for a $100 loan, for example – but failed to disclose the annual percentage rate (APR). For a typical 14-day pay period, consumers who obtain payday loans from American Cash Market would pay an APR of 460 percent; loans from CashPro would have a 520 percent APR, and loans from Anderson Payday Loans would have an APR ranging from 521 percent to 782 percent. APR disclosure helps consumers comparison shop so they can make informed decisions in securing credit. The FTC stresses the importance of APR disclosures in its consumer education publication, “Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives ,” available at

In typical payday loan transactions, consumers receive cash in exchange for their personal checks or authorization to debit their bank accounts, and lenders and consumers agree that consumers’ checks will not be cashed or their accounts debited until a designated future date. Payday loans have high fees and short repayment periods, which translate to high annual rates, and they often are due on the borrower’s next payday.

The proposed consent orders would prohibit these lenders from advertising certain credit offers without providing consumers with key disclosures, such as the APR, as required by the Truth in Lending Act and Regulation Z.

See also  In the Matter of CashPro, doing business as

FTC Press Release

FTC Approves Final Consent Order in Matters of CashPro, American Cash Market, Inc., and Anderson Payday Loans

June 6, 2008

Commission approval of final consent orders – Following a public comment period, the Commission has approved the issuance of final consent orders in the matters of CashPro d/b/a, American Cash Market, Inc., and Anderson Payday Loans. The Commission vote to approve the final orders and send responses to commenters of record was 4-0. (FTC File Nos. 072-3202, 072-3210, and 072-3212; the staff contacts are Cara Petersen and Quisaira Whitney, Bureau of Consumer Protection, 202-326-3224 and 202-326-2351; see press release dated February 27, 2008.)

Exhibit 1
Complaint (2)
Exhibit 1
Decision and Order
Letter to Commenter Brantford Moorish

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