Page "Loan shark" Paragraph 9

Opposition to salary lenders was spearheaded by social elites, such as businessmen and charity organizations.

Businessmen were encouraged not to fire employees who were indebted to loan sharks, as they unwittingly supported the industry by providing lenders with a means of blackmailing their customers (" pay up or we'll tell your boss and you'll be fired ").

Charities provided legal support to troubled borrowers.

This fight culminated in the drafting of the Uniform Small Loan Law, which brought into existence a new class of licensed lender.

The law was enacted, first in several states in 1917, and was adopted by all but a handful of states by the middle of the 20th century.

The model statute mandated consumer protections and capped the interest rate on loans of $ 300 or less at 3. 5 % a month ( 42 % a year ), a profitable level for small loans.

Lenders had to give the customer copies of all signed documents.

Additional charges such as late fees were banned.

The lender could no longer receive power of attorney or confession of judgment over a customer.

These licensing laws made it impossible for usurious lenders to pass themselves off as legal.

Small loans also started becoming more socially acceptable, and banks and other larger institutions started offering them as well.