Loan Sharking

The practice of lending money at interest rates far exceeding what is legally permitted, historically associated with organized crime and enforced not through the civil courts, where the underlying loan is generally unenforceable as usurious, but through the threat or actual use of violence, intimidation or extortion against a borrower who falls behind on payment. Loan sharking is documented as a significant historical revenue source for organized crime groups, including the American Mafia through much of the twentieth century, targeting borrowers, including small business owners and gamblers, who could not obtain credit through a bank or other regulated lender and had no legal recourse once they had agreed to the arrangement. Law enforcement literature distinguishes loan sharking from a predatory but nominally legal lending product, such as a payday loan, by the combination of an interest rate far outside any legal limit and the use of extralegal, often violent, collection methods.