It’s been a few years since we last talked about Scott Tucker and his illegal payday loan shenanigans. On Thursday, the U.S. Supreme Court made it much harder for the Federal Trade Commission to force him to pay back everyone he’s scammed.
As a reminder of who Scott Tucker is, here’s a recap on the wild ride that landed him into a prison cell. Tucker ran an online payday lending empire, AMG Capital Management, that targeted people with poor credit ratings. The predatory loans had interest rates that were sometimes as high as 1,000 percent, rates weren’t only sky-high, but also illegal. Tucker used the profits from this enterprise to live a lavish lifestyle, fund his Level 5 Motorsports team and race at Le Mans.
Tucker tried to get away with it all by arguing that his business was owned by Native American tribes.
The defense didn’t work, and in 2018 Tucker was sentenced to 16 years and eight months in prison. As Reuters reports, it also led to the largest court-ordered settlement in the Federal Trade Commission’s history. Tucker and his company were ordered to pay back $1.27 billion, and all of his assets were seized. Tucker’s appeal went to the 9th Circuit in San Francisco, which upheld the FTC’s decision.
Now, the Supreme Court delivers a whopper. A 9-0 ruling hands a victory to Tucker by limiting the FTC’s power to make him pay for his scam. The judges say that the Federal Trade Commission Act — passed in 1973 — doesn’t allow the FTC to seek judgments, from Reuters:
The justices found that the consumer protection agency overstepped its authority in its practice of seeking court orders to make fraudsters return money improperly obtained from consumers in the form of restitution or disgorgement.
The ruling limits the agency’s authority to seek restitution under one section of a U.S. law called the Federal Trade Commission Act that lets it sue lawbreakers and authorizes judges to issue permanent injunctions. The justices ruled that the provision does not give judges the authority to order defendants to return money to consumers.
According to the Wall Street Journal, the FTC has used the Act to return some $11.2 billion to consumers over the past five years.
Thankfully, it’s not all bad news. The FTC can still collect on behalf of scammed consumers, but other ways of collecting are more complicated and can take longer. Lawmakers are already considering legislation to restore the power that the FTC had until this decision.