News & Analysis as of

Usury

Can Usury Ever Be Waived?

by Allen Matkins on

California courts have defined “usury” as “the exacting, taking or receiving of a greater rate than is allowed by law, for the use or loan of money.” Ross v. Wheeler 140 Cal. App. 217, 222 (1934). The California Constitution...more

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

Equity Kickers and the Criminal Rate of Interest

by Bennett Jones LLP on

Entering into a loan transaction that also has an equity component, such as the issuance of shares or warrants, has previously given rise to some concern that the loan could ultimately run afoul of the 60 percent criminal...more

CFPB doubles down on its attacks against online tribal lenders

by Ballard Spahr LLP on

In a new lawsuit filed in an Illinois federal district court, the CFPB alleges that four online tribal lenders engaged in unfair, deceptive, and abusive acts or practices in violation of the Consumer Financial Protection Act...more

CFPB Lawsuit Targets High-Interest Online Lenders

by Goodwin on

On April 27, 2017, the Consumer Financial Protection Bureau (CFPB) announced the filing of a suit against four online lenders alleging that the lenders illegally collected debts on invalid loans. The complaint alleged...more

Controversial NY lender and student loan servicer licensing proposals removed from budget bill

by Ballard Spahr LLP on

A New York lender licensing proposal that threatened to create new regulatory burdens for financial service providers and to potentially adversely affect credit availability to New York residents and businesses, has been...more

Banks Seek Judgment That Loans Facilitated By Online Platforms Are Exempt From Colorado Lending Laws

In the last two weeks, WebBank and Cross River Bank—federally insured banks chartered in Utah and New Jersey, respectively—filed separate federal court actions (WebBank Complaint; Cross River Bank Complaint) against the...more

Massachusetts and Delaware AGs Announce $25 Million in Settlements with Subprime Auto Lender

by Goodwin on

On March 29, 2017, the Massachusetts and Delaware Attorney Generals (“AGs”) announced settlements with a national bank, resolving allegations that the bank originated unfair and usurious automobile loans in violation of...more

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

by Pepper Hamilton LLP on

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

Remand Decision in Madden v. Midland Funding Raises Questions Regarding Choice of Law Clauses in Consumer Loan Agreements

by Pepper Hamilton LLP on

A careful parsing of state laws should be done if a lender is relying on a choice of law to avoid states that have criminal usury statutes. On February 27, the U.S. District Court for the Southern District of New York...more

Madden v. Midland Update: District Court Denies Summary Judgment and Certifies Class

After the U.S. Supreme Court refused to grant review of the Second Circuit's May 2015 decision in Madden v. Midland concerning federal preemption of state usury rates for loans issued by a national bank, the case was remanded...more

Georgia AG Follows Familiar Pattern; Settles Suit Against California Payday Lender for Alleged Rent-A-Tribe Scheme

by Goodwin on

On February 9, the Attorney General’s Office for the State of Georgia (Georgia AG) announced that it reached a settlement and entered into a consent order with a California-based online lender relating to an alleged...more

CFPB and New York Attorney General File Suit Against Settlement Company For Allegedly Defrauding 9/11 Responders and NFL Players...

by Goodwin on

On February 7, the Consumer Financial Protection Bureau (CFPB) and the New York Attorney General (NY AG) jointly announced they filed suit in the U.S. District Court for the Southern District of New York against a settlement...more

CFPB/NY AG lawsuit against RD Legal Funding may signal greater scrutiny of non-loan financial products such as merchant cash...

by Ballard Spahr LLP on

The CFPB and the New York Attorney General this week filed an action against RD Legal Funding, LLC, two of its affiliates, and their principal (collectively, “RD”), alleging that a litigation settlement advance product...more

Class Action Against Lending Club and WebBank Headed to Defeat

On Monday, a federal district court in the Southern District of New York granted a motion to compel arbitration in Bethune v. Lending Club Corporation, et al., a closely watched putative class action raising important issues...more

Federal Court Certifies to the Ninth Circuit the CFPB’s Challenge to Alleged “Rent-a-Tribe” Scheme

by Goodwin on

On January 3, 2017, the U.S. District Court for the Central District of California certified for appellate review its August 31, 2016 Order finding that a California-based payday lending company used a “rent-a-tribe” scheme...more

Back to the Future: 2017 [Expect Focus Life Insurance – December 2016]

by Carlton Fields on

- Should Your Company Purchase Bitcoin to Pay a Cyber Ransom? - NAIC Draws Line in CFPB Sandbox - NAIC’s Big Data Task Force Sets Charges for 2017 - Broker-Dealers Can Hold Customers’ Initial Checks...more

Complaint Against New York Life Dismissed in Action Testing Application of California’s Usury Laws

by Carlton Fields on

In a recent ruling, Lujan v. New York Life Insurance Company, a federal judge in the Northern District of California rejected the plaintiffs’ claim that New York Life violated California’s usury law by charging compound...more

With No Proof of Duty to Preserve or Bad Faith, Plaintiffs’ Request for Sanctions is Denied: eDiscovery Case Law

by CloudNine on

In Reyes et. al. v. Julia Place Condominiums Homeowners Association, Inc., et. al., No. 12-2043 (E.D.L.A., Oct. 7, 2016), Louisiana District Judge Carl J. Barbier, in denying the plaintiffs’ request for sanctions, stated that...more

Massachusetts Division of Banks Announces Return of $2.3 Million to Consumers Under Settlement with Payday Lender

by Goodwin on

On November 22, 2016, the Massachusetts Division of Banks (“DOB) announced that it has returned approximately $2.3 Million to 1,673 Massachusetts residents, as part of a settlement with an online payday lender. The payday...more

Court Rules MCA Arrangement Is a Loan Under New York's Usury Laws

by Pepper Hamilton LLP on

On October 25, 2016, the New York Supreme Court of Westchester County issued a decision in Pearl Capital Rivis Ventures, LLC v. RDN Construction, Inc. that helps clarify the circumstances under which the provision of a...more

Minnesota AG Secures $11.7 Million in Consumer Relief from Online Lender

by Goodwin on

On November 3, the Minnesota Attorney General (AG) announced that it had settled a 2013 lawsuit it had filed against a California-based online personal loan lender. The AG alleged that the lender used a front company that...more

CFPB receives unprecedented level of comments on payday, title and high-cost installment loan proposal

by Ballard Spahr LLP on

The comment period for the CFPB’s proposed rule on Payday, Title and High-Cost Installment Loans ended Friday, October 7, 2016.  The CFPB has its work cut out for it in analyzing and responding to the comments it has...more

Orrick's Financial Industry Week in Review

Financial Industry Developments - Rejecting "True Lender" Arguments, California District Court Dismisses Claims Against Student Loan Servicers - This past Thursday, September 22, a federal district court in the...more

Rejecting "True Lender" Arguments, California District Court Dismisses Claims Against Student Loan Servicers

This past Thursday, September 22, a federal district court in the Central District of California dismissed an action raising usury claims against several student loan servicers, rejecting the plaintiffs' arguments based on...more

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