'Warning: Predatory Lender' - A Proposal for Candid Predatory Small Loan Ordinances

88 Pages Posted: 16 Dec 2011 Last revised: 12 Apr 2013

See all articles by Christopher Lewis Peterson

Christopher Lewis Peterson

University of Utah - S.J. Quinney College of Law

Date Written: December 13, 2011


Over a hundred different local governments around the country have adopted ordinances restricting high cost, small loans. This trend reflects the solid majority of the American public that opposes the legality of triple-digit interest rate loans and the long historical tradition of treating “payday” and car-title lending as a serious civil offense or even a crime. Nevertheless, perhaps owing to limits on municipal power, local payday lending law has generated relatively little scholarship or commentary. This paper describes the existing local law governing small, high-cost consumer loans and proposes a more emphatic ordinance that better reflects the policy judgment of many local leaders and a solid majority of the America public. In particular, this paper (1) introduces the historical background of regulation of usurious lending; (2) analyzes the recent growth in local ordinances attempting to control small, high-cost loans; (3) discusses the evidence of market failure in the small high-cost loan market; (4) proposes a model ordinance requiring that lenders who offer loans in excess of 45% per annum display a cautionary message that reads: “Warning: Predatory Lender,” on their street, storefront, and other on-premises signs; and, (5) argues that the well-established municipal authority over signage provides a solid statutory and constitutional basis for such a law. An appendix with a model ordinance suitable for adoption by most local governments follows.

Keywords: predatory, payday, car title, lending, debt, usury, warning, government speech, compelled speech, municipal, signs

JEL Classification: D18, G20, H70

Suggested Citation

Peterson, Christopher Lewis, 'Warning: Predatory Lender' - A Proposal for Candid Predatory Small Loan Ordinances (December 13, 2011). Washington and Lee Law Review, Vol. 69, No. 2, 2012, University of Utah College of Law Research Paper No. 14, Available at SSRN: https://ssrn.com/abstract=1971971

Christopher Lewis Peterson (Contact Author)

University of Utah - S.J. Quinney College of Law ( email )

383 S. University Street
Salt Lake City, UT 84112-0730
United States
801-581-6655 (Phone)
801581-6897 (Fax)

HOME PAGE: http://www.law.utah.edu

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