Usury
Friday, I received in the mail a check for $5,000 from a bank I had never heard of before. My wife went through the mail, and when she read the fine print on this check, she discovered that it was actually a five-year loan, at 27.199% interest. In case you don’t have a financial calculator, the total cost of the loan would be $9,176.
Leaving aside the deceptive practice of disguising a contract in the form of an unsolicited check, this loan offer is a truly despicable form of usury. For some reason I don’t understand, it is no longer fashionable to call anything usury. But usury is not only immoral, it is still a crime in most states. Unfortunately, the U.S. congress gutted state laws against usury in 1980 by exempting federal banks from state usury laws. The did this under the guise of protecting banks against inflation, but it was actually a neoconservative triumph of laissez-faire economics over decency and justice.
It is amazing that Beneficial has posted a document on responsible lending practices which seems to be so much at odds with their actual practices. Just because this bank is probably not doing anything illegal does not mean that we should tolerate deceptive and usurious practices that prey on the poor, mentally retarded, and elderly. I encourage you to write to the bank and tell them what you think:
HSBC – North AmericaCorporate Headquarters
2700 Sanders Road
Prospect Heights, IL 60070
I also encourage you to write to your congressman and ask them to add them to toughen U.S. usury law so that state laws apply, or at least a reasonable interest limit is applied.
August 31st, 2005 at 12:20 am
Considering they disquised a contact as a check, that may still count as mail fraud (falls under USPS juristiction). I know quite a few companies have gotten rather deceptive. Junkmail comes as rather legitimate looking “important tax information”, looking exactly like how real tax info comes.
May want to consider checkingout the USPS and their mail fraud section:
http://www.usps.com/postalinspectors/
October 25th, 2005 at 1:12 pm
If you want some interesting insight into usury laws, check out the Frontline episode Secret History of the Credit Card
http://www.shoppbs.org/product/index.jsp?productId=1889877
The short answer is that it’s where the bank is, not where you are.
May 13th, 2006 at 6:49 am
For almost seven years we monitored this shady lender. Household International is now HSBC Finance Corporation. Here is our insight and trend analysis: http://householdwatch.com/kb/
Please note that under the terms of Household’s $484 million settlement their live checks must clearly state, in 12 point bold print, that the check is a loan. The loan itself is still highway robbery.