OGDEN, Utah — A Utah-based bank is under attack from consumer advocates because of what they say are predatory lending practices that leave consumers in debt traps.
Organizations including the National Consumer Law Center, the Consumer Federation of America, and the Center for Responsible Lending filed comments on Thursday with the FDIC, alleging that that Transportation Alliance Bank worked with EasyPay Finance to lure consumers into predatory loans for auto repairs, tires, furniture, and pets.
Thursday's action is on the heels of a report from Stop the Debt Trap coalition outlining these abuses.
The petition notes that “the typical predatory loan borrower will make payments for months that go mostly to interest and do little to pay off the loan,” and urges the FDIC to stop “Transportation Alliance Bank and any other bank from fronting for predatory lenders evading state interest rate limits.”
In addition to the petition, the Coalition submitted a letter describing hundreds of consumer complaints filed against TAB Bank’s lending partner, EasyPay Finance asserting that EasyPay originates loans in TAB Bank’s name and the bank is responsible for its conduct.
In it, the coaltion of consumer groups argues that "in assessing whether TAB Bank is appropriately serving its communities, the FDIC should consider not merely access to credit but also the quality of credit extended.
"Predatory credit at high interest rates that borrowers cannot afford to repay, credit designed to evade state interest rate laws, credit that is the result of deceptive practices, and credit that leads to violations of debt collection, credit reporting, and other laws does not meet the convenience and needs of communities.”
Consumer complaints described outrageous interest rates hidden in fine print, deceptive promises of rebates, and potential violations of the Military Lending Act, which generally prohibits interest rates above 36% for service members and dependents.