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Neuberger, D., Reifner, U. Systemic Usury and the European Consumer Credit Directive. Vierteljahrshefte zur Wirtschaftsforschung, 89(1), 115-132.
Neuberger, Doris and Reifner, Udo "Systemic Usury and the European Consumer Credit Directive" Vierteljahrshefte zur Wirtschaftsforschung 89.1, , 115-132.
Neuberger, Doris/Reifner, Udo: Systemic Usury and the European Consumer Credit Directive, in: Vierteljahrshefte zur Wirtschaftsforschung, vol. 89, iss. 1, 115-132, [online]


Systemic Usury and the European Consumer Credit Directive

Neuberger, Doris | Reifner, Udo

Vierteljahrshefte zur Wirtschaftsforschung, Vol. 89 (2020), Iss. 1 : pp. 115–132

3 Citations (CrossRef)

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Doris Neuberger, University of Rostock, German Institute for Economic Research DIW Berlin

Udo Reifner, Institute for Financial Services iff Hamburg

  • Prof. Dr. Udo Reifner (1948) studied sociology and law in Berlin and Marburg. He is founder and long term Director of the independent institute for financial services (iff reg. ass.). In 1981 he became a professor of commercial law and sociology of law at the Hamburg University of Economics and Politics which became the Department of Socio-Economics at Hamburg University. After his retirement he obtained a chair at Trento University law faculty in Italy. He was guest professor with a focus on financial consumer law at McGill University, Montreal (1986), Université de Louvain-la-Neuve (1990), De Paul University, Chicago (1994), Birmingham University (1997), New York University (Spring 2000). The International Association of Consumer Law awards a price to young scholars in his name. In 2017 he summarized his interdisciplinary research and more than 280 publications many of them in English in four volumes on “money” entitled (1) economics of money, (2) sociology of money, (3) law of money and (4) financial crisis. He recently cofounded the Coalition against Usury in Germany ( He was president of the EU financial user committee and served from 2013 – 2018 as an expert in the advisory board to the German Financial Services Authorities (BAFIN). He is presently attorney at law and research director at iff.
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Summary: Usury is a frequent occurrence in consumer credit markets and particularly affects low-income households. Although the term usury conjures images of a greedy individual consciously acting to exploit the weak bargaining position of another by deceitful and even fraudulent means, we consider it as a systemic issue: as a problem of social discrimination, where belonging to a group which is statistically discriminated against leads to entrapment in a chain of usurious credit and financial contracts.

This paper reviews the economic rationale for usury legislation and evaluates the European Consumer Credit Directive 2008/48/EC in this context. It identifies systemic usury as the product of market failure: the most powerful explanations for which are monopoly power, where the consumer is locked in a bilateral credit relationship; discrimination through risk-based pricing, and negative externalities. Contrary to the main focus of the European Consumer Credit Directive, improved disclosure of contract terms and other relevant information to consumers at the point of contracting cannot address systemic usury in credit markets. Even fully informed consumers can be discriminated against and become trapped in a situation of bilateral monopoly. As a consequence, the Directive is found to be ineffective: it implicitly acknowledges usurious practices and products as legal and undermines the national fight against usury. The Directive must be reformed.