G.L. c. 271, § 49; G.L. c. 140, §§ 96–114B; G.L. c. 260, § 5A
Usury in Massachusetts — 20 percent, a criminal statute, and a letter that legalises it
A claim in Massachusetts trial courts · Last verified August 26, 2026
Massachusetts usury law surprises people twice.
The cap is 20 percent a year, counting interest and expenses in the aggregate — which sounds generous until you find that almost every institutional lender is exempt from it, and that a lender can exempt itself from the rest by mailing a form to the Attorney General.
And § 49 is a criminal statute. It creates no damages action. What a borrower gets is the power to ask a court to declare the loan void.
What the claim is
Someone lent you money at a rate above what the law allows, and you want out of the loan.
Where the right comes from
G.L. c. 271, § 49 — criminal usury. The consumer-lending statutes in G.L. c. 140, §§ 96 through 114B regulate small loans separately, and chapter 93A is the route to money.
The rate
Section 49(a): a person commits criminal usury who "knowingly contracts for, charges, takes or receives, directly or indirectly, interest and expenses the aggregate of which exceeds an amount greater than twenty per centum per annum upon the sum loaned."
"Interest and expenses" is broad. The statute counts everything: interest, brokerage, recording fees, commissions, charges for services, charges for extension of the loan or forbearance, and "all other sums charged against or paid or to be paid by the borrower for making or securing directly or indirectly the loan." It reaches sums paid to someone other than the lender where the lender knew of the charge or could have found it by reasonable inquiry.
So a nominal 15 percent loan with substantial fees can be usurious. The calculation is aggregate, not face rate.
The penalty is criminal: imprisonment for up to ten years, or a fine of up to $10,000, or both.
The two exemptions that swallow most of it
§ 49(e) — regulated lenders. The section "shall not apply to any loan the rate of interest for which is regulated under any other provision of general or special law or regulations promulgated thereunder or to any lender subject to control, regulation or examination by any state or federal regulatory agency."
That removes banks, credit unions, licensed consumer lenders, licensed mortgage lenders and most other institutional lenders. In practice § 49 applies to private lending.
§ 49(d) — the notice to the Attorney General. A person who notifies the Attorney General of an intent to engage in transactions that would otherwise be usurious, and who maintains records of them, is outside subsections (a) through (c) entirely.
The notice is valid for two years and must give the person's name and accurate address. A lender who files it may not publicly advertise the fact or use it to solicit business, though it may be disclosed to an individual who asks.
Practitioners call it the "leg-breaker letter," and its effect is exactly what it sounds like: a lender that files it may lawfully charge above 20 percent. Anyone evaluating a high-rate private loan should assume the notice may have been filed and check.
What the claim pays
Voidness — § 49(c). "Any loan at a rate of interest proscribed under the provisions of paragraph (a) may be declared void by the supreme judicial or superior court in equity upon petition by the person to whom the loan was made."
Three features of that sentence matter. The relief is discretionary — "may be declared void." It is equitable, in the SJC or the Superior Court. And it belongs to the borrower, on petition.
No statutory damages. Section 49 creates no civil damages action, no multiplier and no fee-shifting. This is the central difference between Massachusetts usury law and the consumer statutes around it.
Chapter 93A is the route to money. Usurious or deceptive lending in trade or commerce is an unfair or deceptive act, and 93A supplies the multiplier and mandatory attorney's fees. A usury case in Massachusetts is generally pleaded as a 93A case with § 49 supplying the unfairness.
Chapter 140 remedies, where the lender was making small loans without the required licence — those sections carry their own consequences, and c. 260 § 5A places c. 140 §§ 96 to 114B on the four-year consumer clock.
How long you have to file
No civil limitations period in § 49 itself, because there is no civil damages action in it. The voidness petition is equitable and subject to laches.
Four years for the 93A claim, under G.L. c. 260, § 5A — which also names c. 140 §§ 96–114B and c. 140D, so unlicensed small-lending and truth-in- lending claims run on the same four years.
Six years on a contract theory under c. 260 § 2.
What has to happen before you file
A 93A demand letter, 30 days, for the 93A count — unless it is asserted as a counterclaim, which in a collection suit on the loan it usually is.
Which court
The Supreme Judicial Court or the Superior Court, in equity, for the § 49(c) voidness petition — the statute names them.
District Court or the Boston Municipal Court for a 93A claim within the $50,000 threshold, and most often as a counterclaim in the lender's collection case.
Who can be sued
A private lender not subject to regulatory oversight and without a § 49(d) notice on file.
An unlicensed small-loan lender, under chapter 140.
Not a bank, credit union or licensed lender, under § 49 — though the consumer statutes and 93A still apply to their conduct.
Common defenses
- § 49(e) — the lender is regulated or examined by a state or federal agency.
- § 49(d) — a notice was filed with the Attorney General and is within its two years.
- The aggregate rate did not exceed 20 percent, once the charges are properly computed.
- It was not a loan — a genuine sale, investment or advance against receivables.
- Laches, on the equitable petition.
What people get wrong
The cap is 20 percent, and it counts fees. The face rate is not the test; interest and expenses in the aggregate are.
Almost every institutional lender is exempt. Section 49(e) removes anyone subject to regulatory control, regulation or examination — which is most of the lending market.
A lender can legalise a usurious loan with a letter. The § 49(d) notice to the Attorney General is valid for two years and takes the transaction outside the section.
There is no usury damages claim. The statutory remedy is a discretionary declaration that the loan is void. Money comes from chapter 93A.
Being charged a high rate is not enough. You need a lender who is neither regulated nor noticed — which usually means a private one.
Where it came from
Massachusetts deregulated interest rates for institutional lenders in stages through the twentieth century, on the ordinary theory that a competitive credit market and prudential supervision protect borrowers better than a fixed ceiling does. What was left after that was the problem the ceiling had originally been aimed at: private lending outside any supervision, where a borrower with no alternatives meets a lender with no constraints.
Section 49 addresses that as a crime rather than as a civil wrong, and the choice is deliberate. The conduct the Legislature had in mind was loansharking, where the enforcement mechanism was not a lawsuit and the borrower was not going to file one.
The § 49(d) notice is the strangest feature and the most revealing. Rather than banning high-rate private lending outright, the Legislature made it lawful for anyone willing to identify themselves to the Attorney General and keep records. The point is not to prevent the loan; it is to make the lender visible. A lender willing to be on a list is presumed not to be the kind of lender the criminal statute was written for.
The result is a usury law that does little civil work. A Massachusetts borrower with a bad loan argues chapter 93A, chapter 140 licensing, or fraud — and uses § 49 to establish that the rate was unlawful rather than as the claim itself.
Common questions
What is the maximum interest rate in Massachusetts?
Twenty percent a year, counting interest and expenses in the aggregate — under the criminal usury statute, G.L. c. 271 § 49.
Does the cap apply to my bank or credit card?
No. Section 49(e) exempts lenders subject to control, regulation or examination by a state or federal agency, which covers most institutional lenders.
Can a lender charge more than 20 percent legally?
Yes, if it is a regulated lender, or if it filed a notice of intent with the Attorney General under § 49(d), which is valid for two years.
What can I recover?
Section 49 gives no damages. The SJC or the Superior Court may declare the loan void on your petition. Money generally comes from a chapter 93A claim.
How long do I have?
There is no civil limitations period in § 49. A chapter 93A claim runs four years; a contract claim six.
Do fees count toward the 20 percent?
Yes. The statute counts interest, brokerage, commissions, service charges and other sums charged for making or securing the loan, in the aggregate.