New Jersey Section 2C:21-19 – Wrongful credit practices and related offenses.

New Jersey Law On Wrongful Credit Practices – What You Need To Know

New Jersey has a law called Section 2C:21-19 that deals with wrongful credit practices and related offenses. This law covers things like criminal usury, loan sharking, debt adjusting without a license, and unlawful collection practices. As a New Jersey resident, it’s important to understand what this law says so you don’t accidentally break it.

Criminal Usury – Don’t Charge Too Much Interest

Criminal usury is when someone charges an illegally high interest rate on a loan. In New Jersey, it’s considered criminal usury if:

• You loan money and charge over 30% interest per year (or over 50% interest to a corporation). This is a 2nd degree crime if over 50% interest, and a 3rd degree crime if between 30-50% interest on a loan over $1,000.
• You take money or property as interest above the maximum legal rate. This is also criminal usury.

So if you’re thinking of lending money and charging a really high interest rate, be careful – you could be committing a crime in New Jersey and face fines or jail time. Stick to licensed banks and lenders to avoid this issue.

Business of Criminal Usury – Don’t Make It a Habit

It’s also illegal in New Jersey to regularly engage in the business of criminal usury – like operating an illegal loan sharking business. This is a 2nd degree crime, and you can face up to a $250,000 fine on top of other penalties if convicted.

So extending a few high-interest loans here and there is bad enough, but setting up a whole criminal operation around it makes it much worse in the eyes of the law. Don’t start your own loan sharking business thinking you found easy money – huge fines and jail time await if you get caught.

Possession of Usurious Loan Records – Don’t Keep Evidence

This section makes it a 3rd degree crime to knowingly possess any written records of criminally high-interest loans. So it’s not just making the loans, but keeping evidence of them that’s illegal.

Police can raid loan sharks and if they find detailed records of illegal loans, that’s enough to charge them with a separate crime. So if you’re involved in criminal usury, don’t keep paperwork and evidence around for the cops to find.

Unlawful Collection Practices – Don’t Abuse People

This section deals with unlawful and abusive practices sometimes used to collect debts. It’s a disorderly persons offense in New Jersey to do things like:

• Send fake “official” notices that look like they’re from a court or government agency. This scares people into paying.
• Make false threats of legal action or criminal charges that you don’t really intend on pursuing.
• Repeatedly call at extremely inconvenient hours to harass someone.
• Contact the debtor’s employer and falsely tell them the debtor is a deadbeat, to damage their reputation.
• Falsely tell friends, family or neighbors the person refuses to pay their debt, to embarrass them.

Debt collectors need to follow fair practices. Don’t intimidate or harass people while trying to collect.

False Statements About Credit Terms – Don’t Lie

It’s a disorderly persons offense in New Jersey to lie about key credit terms like the interest rate or other costs of a loan. Lenders need to be up front and truthful about the terms of any loan.

Unlicensed Debt Adjusting – Get a License

In New Jersey it’s illegal to offer debt adjusting services without the proper license. Debt adjusters help consumers manage and repay debts, often negotiating lower balances or payments. This requires a license from the New Jersey Department of Banking and Insurance.

So don’t start advertising as a debt adjustment service or charging fees to “help” people with debts unless you have the proper licensing. There are legal requirements for this industry to protect consumers.

Defenses – What Can You Do?

If you get charged with one of these crimes related to wrongful credit practices, there may be defenses your attorney can raise. For example:

• You made a good faith error and had no intent to break the law. This may get the charges dismissed or reduced.
• The loans were within the legal interest rate limits. You can challenge whether the rates actually violated the law.
• The unlawful collection practices were done by someone else that you had no control over. This may shift responsibility away from you if proven.
• You have a legitimate license to perform debt adjusting that the state was not aware of.

An experienced criminal defense lawyer can hear the details of your case and decide the best defenses to raise on your behalf. Don’t just plead guilty without exploring your options first.

Penalties If Convicted

The penalties if convicted of violating New Jersey’s law against wrongful credit practices depend on the crime, but can potentially include:

• Up to 10 years in prison for criminal usury in the 2nd degree.
• Up to 5 years in prison for criminal usury in the 3rd degree.
• Fines up to $250,000 for operating a business of criminal usury.
• Up to 18 months in jail for unlawful collection practices or false credit statements.
• Up to 5 years in prison for unlicensed debt adjusting.
• Probation and community service may also be imposed for some of these offenses.
• Restitution to victims may be required.
• Forfeiture of any illegal gains from the crimes.

As you can see, the penalties can be severe if convicted, so take these laws seriously if you deal with loans or debt collection in New Jersey in any way. Consult with legal counsel to ensure you stay compliant.

Bottom Line

New Jersey law has tough rules against wrongful credit practices under Section 2C:21-19. Breaking these laws can result in criminal charges and stiff penalties. If you face allegations of criminal usury, unlawful debt collection, or any related offenses, speak to a criminal defense attorney right away to protect your rights. A skilled lawyer can argue defenses and negotiate the best resolution to your charges. Don’t wait to act if you’ve been accused of violating this law.