Skip to main content

Search

Consumer Credit Regulation: 9.3.19 Kentucky

The Deferred Deposit Service Business and Check Cashing Act303 authorizes payday lending in Kentucky. However, it does impose some restrictions on lenders. A lender may not make more than two payday loans from a borrower at a time.

Consumer Credit Regulation: 9.3.22 Maryland

Payday lending is not authorized by statute in Maryland. Small loan transactions are governed by that state’s Consumer Loan Act,321 which prescribes an interest rate cap of 2.75% per month on that part of the principal balance not more than $500.322 This 33% APR effectively prohibits the practice of payday lending in Maryland. Loans made by unlicensed lenders are unenforceable and may not be collected by collection agencies.323

Consumer Credit Regulation: 7.7.8.1b.1 Introduction

A consumer has three avenues to raise defenses against a card issuer concerning a merchant’s credit card charges appearing on the consumer’s statement. All three are based on rights found in the federal Truth in Lending Act (TILA):

Consumer Credit Regulation: 7.7.8.2.1 General requirements to attain the rights of a holder in due course

The common law rule is that an assignee is subject to all defenses and claims in recoupment that the consumer could raise against the assignor.618 But section 3-305 of the Uniform Commercial Code (UCC) generally allows an assignee of a promissory note or other negotiable instrument to be free from those claims and defenses if it has attained the status of a holder in due course or acquired the rights of a holder in due course.619

Consumer Credit Regulation: 7.7.8.2.2 No holder-in-due-course rights where note contains FTC Holder Notice

There can be no holder-in-due-course status when the credit agreement contains the FTC Holder Notice since that notice is inconsistent with holder-in-due-course status. UCC Article 3 states that when the notice is in the contract “there cannot be a holder in due course of [such an] instrument.”634 Since the notice is in the note from the origination, no holder obtains holder-in-due-course rights, so no subsequent holder can acquire the rights via the shelter rule.

Consumer Credit Regulation: 7.7.8.2.4 No holder in due course rights unless the note’s amount and due date are fixed

If a loan is not a negotiable instrument, then no holder of that instrument can become a holder in due course. A negotiable instrument must contain a promise to pay a fixed amount of money.645 Consequently, there can be no holder in due course relating to any open-end credit obligation. The amount of principal owed on open-end credit is unknown at the time the loan is originated and the amount changes over time.

Consumer Credit Regulation: 7.7.8.2.6 Sloppy transfer of a note

For an entity to become a holder in due course, it must be a “holder” of a negotiable instrument, meaning that the instrument must be negotiated to that entity. If the instrument is not negotiated properly, then the party seeking to enforce the instrument is not in fact a holder of the instrument. Often, due to sloppy paperwork, negotiation does not take place or the assignee cannot prove that it properly took place, and thus the assignee is not a holder or a holder in due course.

Consumer Credit Regulation: 11.3.4.2 Limits on Term and Payment Schedule

A few RISAs provide a limit on the term of an installment sales contract.91 More common are restrictions on irregular payments. Many RISAs require that the obligation be repayable in substantially equal installments except in limited circumstances. A requirement of substantially equal installments effectively bans balloon payments. Many RISAs also require that the payments be spaced out at equal intervals. Most of these laws allow the schedule of payments to be adjusted to the seasonal or irregular income of the debtor.

Consumer Credit Regulation: 14.5 Settlements or Judgments (“Factoring”)

Tort or other legal settlements are often structured to provide payment over a period of years.96 Beneficiaries of structured settlements—who may be financially desperate or impaired by their injuries—are vulnerable to predatory transactions whereby they sell, assign, or pledge a large number of future payments in return for upfront cash.97 Challenging these transactions as loans may be tricky, especially in states that have a statuto

Federal Deception Law: 6.3.6.3.4 Scope of consent

Even if providing a cell phone number can be construed as consent to receive certain robocalls, it should not be construed as consent to receive them on any and all topics. Thus, a second question is whether, by providing a cell phone number, the consumer consented to the subject matter of the autodialed calls.491 In 2012, the FCC stated:

Federal Deception Law: 6.3.6.4.1 Courts’ interpretation of “called party” and their treatment of reassigned numbers

The TCPA requires that the caller have the consent of the “called party” to make an autodialed or prerecorded call to a cell phone.504 Many courts have held that consent must be given by the person who presently subscribes to or uses the cell phone.505 Thus, a non-debtor who receives an autodialed or prerecorded collection call on a cell phone has standing to bring a TCPA claim.506 For example, if a debt collector places automated calls to a cell n