Illegal but moral? (part 2)

Before moving on, let me to present another example of an illegal agreement containing promises that are not necessarily immoral: usurious payday loans. No, I am not trying to troll you; hear me out. First and foremost, not all payday loans are illegal, but let’s focus on those that are. The case of Buckeye Check Cashing, Inc. v. Cardegna is instructive in this regard. In this case, the lead plaintiff, John Cardegna, brought a class action in a Florida state court, alleging that his payday loans were illegal under a State law. The defendant was a shady payday lender, but instead of charging an interest rate, the lender would charge an excessive service fee for assuming the risk of default. Mr. Cardegna claimed that this service fee was, in reality, a disguised usurious loan under then-existing state law, but what is the moral status of payday loans? Even if such loans are usurious, don’t borrowers still have a moral duty to repay the principal?

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About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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