Rate Regulation at the Crossroads of Usury and Unconscionability: The Case for Regulating Abusive Commercial and Consumer Interest Rates under the Unconscionability Standard

Abstract

This article builds on the argument that the usury solution is flawed and urges a compromise between usury and market control that employs the variable fairness standard of unconscionability to police unfair interest pricing. The article examines American and comparative usury and unconscionability regulation to develop appropriate guidelines for unconscionability's new duty. It then proposes a model statute articulating the unconscionability standard for consumer loans. Finally, the article advocates employing usury controls under a limited regime of "spot treatment," rather than blanket control, for persisting pockets of lender abuse the unconscionability standard may fail to deter.

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