Federal Trade Commission investigating online payday lender profiled by CBS News

An online payday lending business, the subject of a CBS News/Center for Public Integrity investigation in September, is now under investigation by the Federal Trade Commission (FTC) according to information revealed at a recent Colorado state court hearing.

The online payday lenders are operated by a parent company called AMG Services and they lend money under the names 500fastcash, United Cash Loans, US Fast Cash and Ameriloan.

The Colorado Attorney General argued at a November hearing that while a small Native American tribe owns the businesses, Level 5 Motorsports race car driver and convicted felon Scott Tucker actually runs the payday lending operations. AMG Services employs Scott Tucker.

Numerous attorneys general, including Colorado, are pursuing the payday lending companies affiliated with Tucker for breaking state laws.

Based on financial documents obtained by the Colorado Attorney General, the payday lending operation took in between $16 and $20 million a month as recently as 2008. The Native American tribes take 1% of profits or between $160,000 and $200,000 a month according to the Attorney General. In exchange, the tribe, called the Miami Nation of Oklahoma, owns AMG Services. The ownership arrangement shields the lenders from state laws according to the attorney general.

Conly Schulte, attorney for the Miami Nation of Oklahoma disputed this arrangement in court saying the tribe itself approves the loans.

In an email, Schulte stated he could not comment any further citing attorney-client privilege and the judge's order not to discuss the case. The chief of the Miami Nation said in an earlier letter in September to CBS that the tribe follows all federal laws.

The Federal Trade Commission declined comment on the ongoing investigation. A payday lending customer told CBS News she was interviewed for an hour by an investigator with the FTC about Ameriloan, one of the lenders affiliated with Scott Tucker and owned by the Miami Nation.

The FTC's investigation into these online tribal payday lenders is the agency's second confirmed investigation into online tribal payday lenders.  The FTC took action against Lakota Cash based in South Dakota last September.

In its investigation, CBS News found a dozen former borrowers who said the companies deposit paycheck advances directly into the borrower's bank account. But within weeks, customers told CBS, the lender pulls money out of their accounts and begins charging confusing bank "fees" and "payments" often adding up to thousands more than what they borrowed.

Former employees also told CBS News the lenders, like Ameriloan and United Cash Loans, were "secretive" and purposely made the contracts difficult to understand so that customers would be blindsided by a barrage of fees and payments. Once the fees pile up many customers close their bank accounts and that's when, according to former customers and employees, the lender begins to harass the customer with relentless phone calls to their home and work.

The Colorado Attorney General's staff also charged in court that Tucker uses money from the payday lending profits for his private $13 million jet, and multi-milion dollar homes while funneling $2 million a month to his exclusive racing team.

"I was vulnerable and they were there to help me," says Patrick Taylor from North Carolina who lives on disability checks. Taylor says he applied for his first payday loan for $395 but he said over time he was hit with $1200 in fees. He said he closed his account and "[that's] when the gates of hell opened - they went straight to accusations." Taylor says the company representative threatened to arrest him.

Upon hearing that Colorado law enforcement has stated that Tucker, a high-end race car driver actually profits from the payday loan business and flies in a corporate jet, Taylor told CBS, "I hope he enjoys the seat I paid for."