Prohibitions against usury date back to biblical times. The prophet Ezekiel compares a usurer to someone who is a “thief, a murderer…who oppresses the poor and the needy” (18:10-13). After 1776, all states adopted general usury laws. Most states limited interest rates to under 10%. However, beginning in the late 1970s and early 1980s, many state usury laws were significantly weakened, preempted or even repealed. The loss of traditional usury protections enabled usurious predatory lending practices to become even more harmful and widespread.
As a result, Americans have become extremely vulnerable to usurious exploitation. Some tax preparers provide rapid refunds to consumers for a fee that, when calculated over the course of a year, can approach an annual percentage rate (APR) of over 400%. Similarly, payday lenders lock borrowers into debt treadmills, with fees that translate into APRs of 300% to 500%. The removal of fiscal restraints has led to high interest rates and fees that are crippling Americans across the socioeconomic spectrum.
JCPA believes that usury laws should be revitalized by capping consumer interest rates at reasonable levels as determined by state legislatures and Congress.
The community relations field should:
- Educate members of the Jewish community and the general public about the need to revitalize consumer usury laws at the Federal and state levels.
- Advocate for consumer laws to include caps on non-commercial interest rates and to promote legislation that addresses the substitution of costs and exorbitant fees.