News & Analysis as of

Usury Lenders

Mayer Brown

Texas Commercial Financing Disclosure and Registration Law Threatens Sales-Based Financing Industry

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Texas has enacted a law that has the potential to place substantial impediments on sales-based financing providers, including merchant cash advance companies, seeking to operate in Texas. The new Texas law prohibits...more

Sheppard Mullin Richter & Hampton LLP

Texas Supreme Court Issues New Interpretation of Texas Usury Law

On May 23, the Texas Supreme Court issued an opinion holding that in determining whether a commercial loan is usurious under Texas state law, the “actuarial method” must be employed. This requires the applicable amount of...more

Orrick, Herrington & Sutcliffe LLP

Texas Supreme Court answers Fifth Circuit’s question on loans in ruling

On May 23, the Supreme Court of Texas ruled that the maximum permissible interest on a loan must be calculated using the declining principal balance rather than the initial total principal amount. This decision was in...more

Katten Muchin Rosenman LLP

Maximum Interest Must Be Calculated Using the Actuarial Method Resulting in Lower Interest Charges as Principal Balance Declines

Commercial lenders in Texas should be made aware of the Texas Supreme Court’s new decision in American Pearl Group, LLC v. National Payment Systems, LLC, No. 24-0758. In that case, the Court clarified the “actuarial method”...more

Ballard Spahr LLP

New York AG sues payday lenders MoneyLion and DailyPay

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New York Attorney General Letitia James has sued payday lenders MoneyLion Inc. and DailyPay Inc. in New York state court, alleging that the two companies took advantage of tens of thousands of New Yorkers....more

Troutman Pepper Locke

Texas Introduces Legislation to Regulate Sales-Based Commercial Financing

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Last month, the Texas legislature introduced two companion bills, S.B. No. 2677 and H.B. No. 700, to regulate sales-based commercial financing. For purposes of the proposed legislation, sales-based financing is a transaction...more

Orrick, Herrington & Sutcliffe LLP

Massachusetts’ Attorney General settles with lender for alleged usury claims

On May 21, the Massachusetts Attorney General (AG) released an Assurance of Discontinuance against a lender for allegedly violating the state’s Consumer Protection Act (CPA) provision on unfair and deceptive acts and...more

Ballard Spahr LLP

CFPB alleges dark patterns in suit against fintech peer-to-peer lender

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On May 17, 2024, the Consumer Financial Protection Bureau (“CFPB”) filed suit against an online lending platform, alleging, among other things, the use of dark patterns to induce consumers to pay tips and donations,...more

Allen Matkins

Judge Rules That A Front For Mexican Cartel Had The Capacity To Protect Its Own Interests

Allen Matkins on

California Corporations Code Section 25118(b) provides an exemption from the state's usury limitations for loans.  The exemption is subject to several conditions.  One condition is the existence of either a preexisting...more

King & Spalding

Ninth Circuit Addresses Issue of First Impression Concerning the Usury Defense Under California Law

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On May 25, 2023, the U.S. Court of Appeals for the Ninth Circuit, in a two-to-one split decision, held that an exemption to California’s usury laws for certain “aggregate” loan amounts applies only to indebtedness of a single...more

Orrick, Herrington & Sutcliffe LLP

Michigan Supreme Court limits applicability of “usury savings clauses”

On June 23, the Michigan Supreme Court reversed a circuit court’s decision on a case involving Michigan’s “longstanding prohibition on excessive interest rates for certain loans.” The case involved a “usury savings clause,”...more

Troutman Pepper Locke

DC OAG Resolves Alleged Usury and Deceptive Acts Violations With Community Lending Platform

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On May 10, SoLo Funds, Inc. (Solo), one of the largest community lending platforms in the United States, entered into a settlement with the District of Columbia attorney general (OAG). The settlement resolves claims that the...more

Orrick, Herrington & Sutcliffe LLP

4th Circuit affirms certification of class action in tribal lending case

On January 24, the U.S. Court of Appeals for the Fourth Circuit concluded that a district court did not abuse its discretion when certifying a class action. The lawsuit alleges an individual who orchestrated an online payday...more

King & Spalding

Rhode Island Court Upholds Usury Penalty (Without Interest) Against Lender

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On April 1, 2022, the Superior Court of Rhode Island, Providence County, granted partial summary judgment in favor of receivership plaintiffs for statutory damages related to usurious loans in an amount equal to all payments...more

Allen Matkins

Court: OTC Company Has The Capacity To Protect Its Own Interests

Allen Matkins on

Notably, California has a constitutional limitation on interest rates (Cal. Const. Art. XV, Section 1).   Section 25118 exempts certain evidences of indebtedness that meet specified conditions.  One of these conditions is...more

Ballard Spahr LLP

Third Circuit holds application of PA usury law to auto loans made to PA residents at out-of-state locations does not violate...

Ballard Spahr LLP on

The U.S. Court of Appeals for the Third Circuit recently ruled that the application of Pennsylvania usury laws to auto title loans made to Pennsylvania residents who travel outside of Pennsylvania to obtain such loans does...more

Miller Canfield

Commitment Fees Might Constitute Interest Under Michigan Law

Miller Canfield on

Lenders often include fees in loan transactions in addition to an interest rate. Typically such fees are not considered interest, as they compensate the lender for various services or commitments provided under the loan...more

Goodwin

California Department of Business Oversight Investigates Auto Title Lender For Possible Usury

Goodwin on

On September 3, 2020, the California Department of Business Oversight (“DBO”) announced it had initiated an investigation into an auto title lender for possible violations of California’s state usury limits, through its...more

Mitchell, Williams, Selig, Gates & Woodyard,...

Late Penalties on Loan Payments in Arkansas – What's the Rule?

A frequently asked question in the lending community is whether there is an established amount regarding the maximum late fee that can be charged for a late payment made on a loan in Arkansas. Unfortunately, the answer to...more

Carlton Fields

Clarity on Application of California Usury Law: Insurers Not Subject to Compound Interest Limitations

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The California Supreme Court recently handed Northwestern Mutual Life Insurance Co. a decisive victory in a putative class action challenging the insurer’s assessment of compound interest on policy loans, holding that...more

Allen Matkins

Supreme Court: 1934 Amendment Repeals 1918 Limitation On Compound Interest

Allen Matkins on

The same year that the Great War ended, the voters of California approved an initiative measure governing allowable interest rates. This initiative remains uncodified but West Publisher designates these statutes as Civil Code...more

Burr & Forman

Eleventh Circuit Finds Forum Selection Clause and Class Action Waiver in Payday Loan Agreements Unenforceable as against Georgia...

Burr & Forman on

In Davis v. Oasis Legal Fin. Operating Co., LLC, 18-10526, 2019 WL 4051592 (11th Cir. Aug. 28, 2019), the U.S. Court of Appeals for the Eleventh Circuit (“Eleventh Circuit”) affirmed a decision in the U.S. District Court for...more

White & Case LLP

Consumer financial services: The road ahead: Small-dollar loans

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In February 2019, the CFPB released the highly anticipated revamp of its Payday Rule, reinforcing its more lenient attitude towards payday lenders. In light of the Bureau’s softer touch, as well as similar developments at the...more

Patterson Belknap Webb & Tyler LLP

When is a Working Capital Agreement a Loan? It Depends on Your Claim

Suppose you’ve entered into a financial arrangement that resembles a lending agreement, but it is not formally designated as such, and you think you’re paying too much....more

Troutman Pepper Locke

New York Case Is a Win for the Merchant Cash Advance Industry

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Providers of cash advances repaid by sales of future receivables in New York can have greater confidence that these advances are not loans and are not subject to usury laws. On March 16, the Supreme Court of New York,...more

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