Dear msingleton. Thank you for visiting us!!
In a word, the answer to your question is NO, such a contract would
not run afoul of usury laws in Utah. Why? It is the wrong way around.
That is to say that usury laws protect individuals in Utah from PAYING
too high an interest rate; there is no limitation as what someone
might receive.
That is not to say that the contract is therefore "legal." If is
difficult to say from the facts presented, but such a contract may run
afoul of any number of Utah Consumer Protection or commercial laws.
The potential for fraud is always important when giving money to a
person who promises "double your money." As the old saying goes, that
that is too good to be true, generally is too good to be true.
Here are some websites that discuss various fraud schemes:
A general interest site by a consultant on the topic:
http://davidadams.info/DOC_Fraud_Schemes_1.htm
The United States Securities and Exchange Commission:
http://www.sec.gov/investor/pubs/cyberfraud.htm
The United States Federal Trade Commission:
http://www.ftc.gov/opa/1997/9702/fraud-1.htm
Here are some particulars that I wanted to pass on to you concerning
your question:
1. Black’s Law Dictionary (7th ed.) defines Usury as “historically,
the lending of money with interest; Today, the charging of an illegal
rate of interest; An illegally high rate of interest. Likewise,
Black’s defines a Usury Law as a “law that prohibits moneylenders from
charging illegally high interest rates. See Black’s at page 1534.
2. The Usury Law in Utah. There are two forms of usury: Criminal
usury occurs when one knowingly engages in or directly or indirectly
provides financing for the business of making loans at a higher rate
of interest or consideration than is authorized by law (e.g. funding
of traditional loan shark activities). Criminal usury is a felony in
Utah. Utah Code 76-6-520. The other form of usury is Civil usury. The
parties to a lawful contract “may agree upon any rate of interest for
the loan . . .of any money . . .that is the subject of their contract.
Unless parties to a lawful contract specify a different rate of
interest, the legal rate of interest for the loan . . . shall be 10%
per annum.” Utah Code 15-1-1(a)-(b).
http://www.le.state.ut.us/~code/code.htm
Corporations (as borrowers) are generally exempted from usury laws.
Bekins Bar V Ranch v. Huth, 664 P.2d 455 (Utah,1983).
3. Concerns about business practices or opportunities should be
addressed to the Utah Division of Consumer Protection at the following
address:
Division of Consumer Protection
Heber M. Wells Building, Second Floor
160 East 300 South
SM 146704
Salt Lake City, Utah 84114
801-530-6601
fax: 801-530-6001
http://www.commerce.utah.gov/dcp/
They have a very nice website which includes the form that one files
to report a suspicious or wrongful activity.
4. There are numerous protections given to Utah consumers to protect
against nefarious or corrupt business practices. They are certainly
too numerous to mention here. Certainly someone contemplating the
offering of business opportunities to consumers is well advised to
seek competent legal counsel to make sure that the business complies
with the various consumer protection and registration requirements
that the Utah legislature has established.
I hope that I have answered your question. Please, as always, know
that you can ask for clarification of this answer by merely clicking
on the Clarification button of this page.
Good Luck!
weisstho-ga
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Westlaw: Utah + Usury within 20 years |
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