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6000 - Consumer Protection



CHAPTER 42—EXTORTIONATE CREDIT TRANSACTIONS

Sec.

891.  Definitions and rules of construction.

892.  Making extortionate extensions of credit.

893.  Financing extortionate extensions of credit.

894.  Collection of extensions of credit by extortionate means.

895.  [Repealed].

896.  Effect on State laws.

§ 891.  Definitions and rules of construction

For the purposes of this chapter:

(1)  To extend credit means to make or renew any loan, or to enter into any agreement, tacit or express, whereby the repayment or satisfaction of any debt or claim, whether acknowledged or disputed, valid or invalid, and however arising, may or will be deferred.

(2)  The term creditor', with reference to any given extension of credit, refers to any person making that extension of credit, or to any person claiming by, under, or through any person making that extension of credit.

(3)  The term debtor', with reference to any given extension of credit, refers to any person to whom that extension of credit is made, or to any person who guarantees the repayment of that extension of credit, or in any manner undertakes to indemnify the creditor against loss resulting from the failure of any person to whom that extension of credit is made to repay the same.

(4)  The repayment of any extension of credit includes the repayment, satisfaction, or discharge in whole or in part of any debt or claim, acknowledged or disputed, valid or invalid, resulting from or in connection with that extension of credit.

(5)  To collect an extension of credit means to induce in any way any person to make repayment thereof.

(6)  An extortionate extension of credit is any extension of credit with respect to which it is the understanding of the creditor and the debtor at the time it is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person.

(7)  An extortionate means is any means which involves the use, or an express or implicit threat of use, of violence or other criminal means to cause harm to the person, reputation, or property of any person.

(8)  The term State' includes the District of Columbia, the Commonwealth of Puerto Rico, and territories and possessions of the United States.

(9)  State law, including conflict of laws rules, governing the enforceability through civil judicial processes of repayment of any extension of credit or the performance of any promise given in consideration thereof shall be judicially noticed. This paragraph does not impair any authority which any court would otherwise have to take judicial notice of any matter of State law.

[Codified to 18 U.S.C. 891]

[Source:  Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 160), effective May 29, 1968]

§ 892.  Making extortionate extensions of credit

(a)  Whoever makes any extortionate extension of credit, or conspires to do so, shall be fined under this title or imprisoned not more than 20 years, or both.

(b)  In any prosecution under this section, if it is shown that all of the following factors were present in connection with the extension of credit in question, there is prima facie evidence that the extension of credit was extortionate, but this subsection is nonexclusive and in no way limits the effect or applicability of subsection (a):

(1)  The repayment of the extension of credit, or the performance of any promise given in consideration thereof, would be unenforceable, through civil judicial processes against the debtor

(A)  in the jurisdiction within which the debtor, if a natural person, resided or

(B)  in every jurisdiction within which the debtor, if other than a natural person, was incorporated or qualified to do business

at the time the extension of credit was made.

(2)  The extension of credit was made at a rate of interest in excess of an annual rate of 45 per centum calculated according to the actuarial method of allocating payments made on a debt between principal and interest, pursuant to which a payment is applied first to the accumulated interest and the balance is applied to the unpaid principal.

(3)  At the time the extension of credit was made, the debtor reasonably believed that either

(A)  one or more extensions of credit by the creditor has been collected or attempted to be collected by extortionate means, or the nonrepayment thereof has been punished by extortionate means; or

(B)  the creditor has a reputation for the use of extortionate means to collect extensions of credit or to punish the nonrepayment thereof.

(4)  Upon the making of the extension of credit, the total of the extensions of credit by the creditor to the debtor then outstanding, including any unpaid interest or similar charges, exceeded $100.

(c)  In any prosecution under this section, if evidence has been introduced tending to show the existence of any of the circumstances described in subsection (b)(1) or (b)(2), and direct evidence of the actual belief of the debtor as to the creditor's collection practices is not available, then for the purpose of showing the understanding of the debtor and the creditor at the time the extension of credit was made, the court may in its discretion allow evidence to be introduced tending to show the reputation as to collection practices of the creditor in any community of which the debtor was a member at the time of the extension.

[Codified to 18 U.S.C. 892]

[Source:  Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 160), effective May 29, 1968; as amended by section 330016(1)(L) of title XXXIII of the Act of September 13, 1994 (Pub. L. No. 103--322; 108 Stat. 2147), effective September 13, 1994]

§ 893.  Financing extortionate extensions of credit

Whoever willfully advances money or property, whether as a gift, as a loan, as an investment, pursuant to a partnership or profit-sharing agreement, or otherwise, to any person, with reasonable grounds to believe that it is the intention of that person to use the money or property so advanced directly or indirectly for the purpose of making extortionate extensions of credit, shall be fined under this title or an amount not exceeding twice the value of the money or property so advanced, whichever is greater, or shall be imprisoned not more than 20 years, or both.

[Codified to 18 U.S.C. 893]

[Source:  Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 161), effective May 29, 1968; as amended by section 330016(1)(L) of title XXXIII of the Act of September 13, 1994 (Pub. L. No. 103--322; 108 Stat. 2147), effective September 13, 1994]

§ 894.  Collection of extensions of credit by extortionate means

(a)  Whoever knowingly participates in any way, or conspires to do so, in the use of any extortionate means

(1)  to collect or attempt to collect any extension of credit, or

(2)  to punish any person for the nonrepayment thereof,

shall be fined under this title or imprisoned not more than 20 years, or both.

(b)  In any prosecution under this section, for the purpose of showing an implicit threat as a means of collection, evidence may be introduced tending to show that one or more extensions of credit by the creditor were, to the knowledge of the person against whom the implicit threat was alleged to have been made, collected or attempted to be collected by extortionate means or that the nonrepayment thereof was punished by extortionate means.

(c)  In any prosecution under this section, if evidence has been introduced tending to show the existence, at the time the extension of credit in question was made, of the circumstances described in section 892(b)(1) or the circumstances described in section 892(b)(2), and direct evidence of the actual belief of the debtor as to the creditor's collection practices is not available, then for the purpose of showing that words or other means of communication, shown to have been employed as a means of collection, in fact carried an express or implicit threat, the court may in its discretion allow evidence to be introduced tending to show the reputation of the defendant in any community of which the person against whom the alleged threat was made was a member at the time of the collection or attempt at collection.

[Codified to 18 U.S.C. 894]

[Source:  Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 161), effective May 29, 1968; as amended by section 330016(1)(L) of title XXXIII of the Act of September 13, 1994 (Pub. L. No. 103--322; 108 Stat. 2147), effective September 13, 1994]

§ 895.  Immunity of witnesses [Repealed]

[Source:  Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 162), effective May 29, 1968; repealed by section 223(a) of title II of the Act of October 15, 1970 (Pub. L. No. 91-452; 84 Stat. 929), effective December 14, 1970]

§ 896.  Effect on State laws

This chapter does not preempt any field of law with respect to which State legislation would be permissible in the absence of this chapter. No law of any State which would be valid in the absence of this chapter may be held invalid or inapplicable by virtue of the existence of this chapter, and no officer, agency, or instrumentality of any State may be deprived by virtue of this chapter of any jurisdiction over any offense over which it would have jurisdiction in the absence of this chapter.

[Codified to 18 U.S.C. 896]

[Source:  Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 162), effective May 29, 1968]

(b)  The table of chapters captioned "Part I--Crimes" at the beginning of part I of title 18 of the United States Code is amended by inserting

42.  Extortionate credit transactions 891

immediately above

43.  False personation 911

[Source:  Section 202(b) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 162), effective May 29, 1968]


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