The following question was posed to the Louisiana Attorney General regarding “sham” schemes to circumvent the provisions of the Louisiana Deferred Presentment and Small Loan Act, LSA-R.S. 9:3577.1, et seq.:

Does the definition of a loan include purported “purchase” of movable property when it is simultaneously leased back to the “seller,” who retained possession, for rental equal to the original “purchase price,” for fifteen days (and two “renewals” of fifteen days), after which the “seller” may “repurchase” it for the original “purchase price.”

A summary of his response is presented below:

The true substance of the transaction is not a sale and lease-back arrangement; instead, it is a disguised loan.  One who purportedly “buys” and simultaneously “leases” the item to the “seller” must be licensed under the LCCL to make loans.  For the full text of the opinion, contact Ms. Adrienne Gauthier, Office of the Attorney General, 225-342-4597.