“An Abundance of Caution” Doesn’t Trump the Public’s Right to Know
By Sarah Belton
We’re emerging from a summer where payday lending was the topic of a terrific rant by John Oliver and a Shark Week Campaign reminded folks of the dangers of predatory lending practices. We should remember that the dissemination of this information depends on public access. This means access to legislative hearings, access to interviews, and access to cases combating lending abuses—cases like the one currently being prosecuted by the Federal Trade Commission in federal court in Nevada.
Public Justice is representing Americans for Financial Reform, an organization dedicated to transparency for all financial products, in asking the court to unseal briefs and exhibits being hidden by the defense in the FTC’s case.
In April 2012, the FTC sued a bunch of online payday lenders alleging that the defendants engaged in deceptive acts and practices in connection with their payday loans. The defendants in the case—lenders operating a myriad of websites and claiming association with Native American Tribes to avoid complying with state laws—conditioned their loans on electronic access to borrower bank accounts. Then the lenders made periodic withdrawals in amounts that far exceeded the total of payments represented in their loan documents. Oh, and their collection practices included threatening consumers with arrest or legal action if they didn’t pay up. These behaviors aren’t just sketchy; they are prohibited by federal laws.
In the years of litigation that have followed, much of the information filed in this case, hundreds of pages of briefs and exhibits including details about the loans and various documents produced the defendants, have been sealed.
Many of these documents weren’t sealed because a party had made the showing—required by the First Amendment and federal common law—to overcome the public’s presumptive right of access. Instead, they were sealed out of “an abundance of caution.” Caution doesn’t meet the high legal standard required for secrecy. Accordingly, we are asking the court to immediately unseal these records.
As my colleagues have recently lamented in a case regarding defective highway guardrails, it shouldn’t be a secret when products are unsafe. That is just as true when the products in question are payday loans—high interest loans marketed to desperate and vulnerable borrowers to trap them in a cycle of debt. And it’s especially true in a case where the central allegations are that a payday lending enterprise violated federal laws by obscuring the terms of its online loans.
For years, the payday lenders in this case thrived by using a maze of websites and corporate structures. Keeping documents about these loans secret and away from the public eye further hides the illicit practices at the heart of this litigation. We’ve got a right to know what’s happening in our courts. Public Justice is committed to making sure that right protects the public and not the secrets of payday lenders.