Payday lending giant AMG Services was issued a subpoena Monday for “deceptive lending schemes,” adding more evidence that the U.S. government is cracking down on the industry. The AMG Services subpoena is the latest in a series of blows to the payday lending industry, which has come under scrutiny in recent months following the January announcement of Operation Choke Point, a joint effort by the Financial Fraud Task Force and the Consumer Financial Protection Bureau.
The reason for the AMG Services subpoena is unclear and marks the second time it has come under investigation. The Overland Park, Kansas-based company was sued by the Federal Trade Commission (FTC) in 2012 for deceptive practices, failing to disclose to borrowers the true costs of loans and falsely threatening consumers with prosecution.
The AMG Services subpoena is the latest indication that the payday lending industry is in the crosshairs of the U.S. government. On Monday, Instabill blogged about MasterCard and Visa joining forces with New York State Department of Financial Services to curb illegal payday lending practices.
Additionally, when Instabill representatives attended the Transact 14 Conference in Las Vegas April 8-10, 2014, one of the seminars, entitled Understanding Operation Choke Point, featured a 114-page document for independent sales organizations (ISO) and payment service providers (PSPs) about how to deal with the new landscape of the payday lending industry.
The AMG Services subpoena is the most convincing evidence yet: Payday lenders, as well as the ISOs and PSPs which underwrite them, need to adhere to the state guidelines and good practices more than ever. In an April 16 blog, Instabill copywriters offered their best advice to payday lenders based on the Transact 14 Seminar in Las Vegas. Some good habits included gathering as many KYC (know your customer) documents as possible, faithfully adhering to state guidelines and utilizing salespeople as underwriters.
Even as the payday lending industry is under scrutiny, payday loans remain short term solutions for short term debt. Instabill continues to provide payday lender merchant accounts worldwide and processes in 160 currencies. Chat one-on-one with a merchant account representative today at 1-800-318-2713.