Digital Library: Tenth Circuit Limits Rent-a-Bank Schemes

December 12, 2025 — Article

Predatory lenders use rent-a-bank schemes to evade state usury limits and charge astronomical rates—100%, 500% and even higher—that are illegal in as many as 45 states.  In a classic rent-a-bank scheme, a high-cost lender “rents” a state bank chartered in a state without usury limits for banks and then evades other states’ usury caps by bootstrapping onto a bank’s ability to export its home state usury law throughout the country. 

This article first explains a November Tenth Circuit decision that severely limits rent-a-bank schemes in Colorado. The article then considers other challenges to rent-a-bank arrangements targeting consumers in other states that may offer consumers significant remedies.

This article cites to the recent digital update to the new 2025 Fourth Edition of NCLC’s Consumer Credit Regulation.