Banks, marketplace lenders, and other nonbank lenders were dealt a setback when a federal appeals court declined to reconsider a ruling that has set off alarm bells across the consumer finance industry.

The May 22 decision involved the sale of charged-off credit-card debt by a Bank of America subsidiary. A three-judge appeals panel in New York found that the bank's legal authority to charge an interest rate that exceeds state usury caps did not transfer to the debt buyer.

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