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State Usury Laws versus Payday Lending

Richard Kish

Lehigh University

Abstract

This study outlines the friction that exists between usury laws and attempts to regulate payday lending. Abusive practices exist to maximize the return to the payday lender through high fees and lax policy enforcement on rollover of loans through same-day or “touch and go” rollovers. Interest costs are in the hundred on annual percentage terms and dollar interest amounts are typically greater than the initial amount of the loan when it is finally paid off. The case is made for Congress to extend the “Talent Amendment,” which protects military personnel and their dependents against predatory lending to all consumers.