News & Analysis as of

Usury

King & Spalding

Southern District of New York Finds Usury Claim Subject to Choice-of-Law Provision as a Contractual Claim, Not a Tort Claim

King & Spalding on

On June 6, 2022, the U.S. District Court for the Southern District of New York found that a contractual New York choice-of-law provision precluded a borrower-plaintiff from obtaining summary judgment on a usury claim brought...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

Class Action Lawsuit Filed Against FinTech Lender Opportunity Financial For Evading Texas State Usury Laws

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On June 1, 2022, plaintiff Kristen Michael filed a class action lawsuit against FinTech lender Opportunity Financial, LLC (“OppFi”) on behalf of herself and a putative class alleging, inter alia, that OppFi loans money at an...more

Morrison & Foerster LLP - Left Coast Appeals

This Week at The Ninth: E-Scooters and Usury

This week, the Ninth Circuit examines whether a city’s collection of location data from electronic scooters violates the Fourth Amendment, and whether a consumer lender can circumvent state usury laws by making loans through...more

King & Spalding

New York Court Holds that Violation of Criminal Usury Law May Render Loan Agreement Void ab initio

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On March 15, 2022, the U.S. Court of Appeals for the Second Circuit vacated a district court’s denial of a borrower’s motion to dismiss lender claims. Applying the New York Court of Appeals’ guidance from certified questions,...more

Hudson Cook, LLP

Court Upholds "Valid When Made" Rules, But "True Lender" Risk Lives On

Hudson Cook, LLP on

In a victory for fintechs and the banks that partner with them, the U.S. District Court for the Northern District of California recently turned back two challenges by a consortium of state attorneys general to the "valid when...more

Morgan Lewis - All Things FinReg

“Madden Fix” Rules Withstand a Key Test: What Happens Next

More than six years after it was decided, the practical consequences of the US Court of Appeals for the Second Circuit’s Madden v. Midland Funding, LLC decision continue to diminish. The decision—which held that, under some...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...

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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

Gray Reed

Could Corporate Convertible Loans be Subject to Criminal Usury Laws in New York?

Gray Reed on

In Adar Bays, LLC v. GeneSYS ID, Inc., the New York Court of Appeals (the “Court”) held that the conversion price in a convertible option could be classified as interest thereby potentially falling under the territory of New...more

Rosenberg Martin Greenberg LLP

United States Court of Appeals for the Fourth Circuit Refuses to Enforce Arbitration and Choice of Law Provisions Because of...

Most of us have heard the expression “Pigs get fat, hogs get slaughtered.”  The United States Court of Appeals for the Fourth Circuit did not slaughter the officials of the lenders in its November 16, 2021 opinion in Hengle...more

Weiner Brodsky Kider PC

MD Court of Appeals Limits Property Inspection Fees

The Maryland Court of Appeals recently reversed the dismissal of a putative class action alleging state law violations related to property inspection fees charged by a mortgage loan servicer, holding that the Maryland Usury...more

Goodwin

Virginia AG Settles with Foreclosure Rescue Lender

Goodwin on

On August 24, 2021, the Virginia Attorney General (“Virginia AG”) announced that it entered into settlement ​with a Virginia-based lender and its managing member over allegations that the lender violated §§ 6.2-303 and...more

Miller Canfield

Commitment Fees Might Constitute Interest Under Michigan Law

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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

Mayer Brown - Retained Interest

Illinois Imposes Strict 36% Usury Cap for a Range of Consumer Finance Products and Providers

On March 23, 2021, Illinois Governor JB Pritzker signed into law Senate Bill 1792, enacting the Predatory Loan Prevention Act (PLPA) and capping interest at an “all-in” 36% APR (similar to the Military Lending Act’s MAPR) for...more

Orrick, Herrington & Sutcliffe LLP

States Seek to Invalidate The OCC True Lender Rule

Recently, seven states (New York, California, Colorado, Massachusetts, New Jersey, Minnesota, and North Carolina) and the District of Columbia filed suit in the Southern District of New York against the Office of the...more

Bradley Arant Boult Cummings LLP

Florida Court Affirms That Merchant Cash Advance Product Not Subject to Usury Statute

This month, a Florida appellate court held that a merchant cash advance (MCA) purchase and sale agreement was not a “disguised loan” and, therefore, was not subject to Florida’s criminal usury statute. MCA purchase and sale...more

Ballard Spahr LLP

Plaintiffs withdraw appeals to Second Circuit from district court decisions holding NBA preempts application of state usury law to...

Ballard Spahr LLP on

The parties in Petersen v. Chase Card Funding, LLC and Cohen v. Capital One Funding, LLC, have filed Stipulations agreeing to the withdrawal with prejudice of the plaintiffs’ appeals to the Second Circuit from the district...more

Manatt, Phelps & Phillips, LLP

Consent Order Confirms California MCA Enforcement Campaign

On November 12, 2020, the California Department of Financial Protection and Innovation (DFPI) (until recently called the Department of Business Oversight) entered into a consent order with Allup Finance LLC (Allup) finding...more

Lowenstein Sandler LLP

Credit Card ABS: Capital One Affiliates Secure Dismissal of Putative Class Action Alleging Usury

Lowenstein Sandler LLP on

In the most recent development in Cohen v. Capital One Funding LLC, a case seeking to certify a class asserting that New York State’s usury laws can apply to securitized credit card debts, Capital One-affiliated defendants...more

Goodwin

CFPB Files Complaint Against Florida-Based Payday Lender

Goodwin on

On November 5, 2020, the Consumer Protection Financial Bureau (CFPB) announced that it had filed a complaint against a Florida-based payday lender and its CEO in the Southern District of Florida. The complaint alleges that...more

White & Case LLP

OCC Finalizes True Lender Rule, Attempting to End Uncertainty around Bank-Fintech Partnership Models

White & Case LLP on

The Office of the Comptroller of the Currency (OCC) issued a final rule that creates a bright-line test to determine when a national bank or federal savings association (bank) makes a loan and is the "true lender," including...more

Ballard Spahr LLP

Hundreds comment on OCC proposed “true lender” rule

Ballard Spahr LLP on

We recently published a blog about the OCC’s proposed rule “National Banks and Federal Savings Associations as Lenders” (the “Proposed Rule”), which would clarify that a bank (or savings association) is properly regarded as...more

Ballard Spahr LLP

Second Circuit hears oral argument in RD Legal Funding

Ballard Spahr LLP on

Last week, the U.S. Court of Appeals for the Second Circuit heard oral argument in RD Legal Funding. The three judge panel consisted of two members of the Second Circuit, Judge Denny Chin and Senior Judge Barrington Parker,...more

Ballard Spahr LLP

Trade groups file summary judgment motion in Texas lawsuit challenging CFPB payday loan rule

Ballard Spahr LLP on

The industry trade groups challenging the CFPB’s final rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans (the Rule) have filed a motion for summary judgment. The motion follows the filing of an Amended...more

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