Payday lending law violated constitution
National News
A 1999 state law allowing so-called payday lenders to charge high fees for short-term loans violates the state constitution, the Arkansas Supreme Court ruled Thursday.
In a 6-0 decision, the court said the fees permitted under the 1999 Check Cashers Act were really triple-digit interest rates. The state constitution limits interest rates on loans to 17 percent.
"Because that fee is in reality an amount owed to the lender in return for the use of borrowed money, we must conclude that the fees authorized clearly constitute interest," Justice Paul Danielson wrote.
Through a payday loan in Arkansas, a customer writing a check for $400, for example, typically would receive $350. The lender would keep the check for about two weeks before cashing it.
The customer could buy back the check for $350 during that two-week period, but otherwise would pay the full $400 when the company cashed his check. The $50 charge on a $350 loan for 14 days equates to 371 percent, well above Arkansas' usury limit.
Attorney Todd Turner, who represented the plaintiffs who challenged the Check Cashers Act, said the ruling means it will be impossible for payday lenders to operate in the state.
"It's great for all the Arkansas residents who have been paying 600 percent for these loans," Turner said.
Tom Hardin, attorney for the Arkansas Financial Services Association that sought to preserve the law, did not immediately return a call seeking comment.
Even before Thursday's ruling, the number of payday lenders in the state has dwindled in response to threats of lawsuits from Attorney General Dustin McDaniel. An advocacy group said in a report last month that the number of payday lenders operating in the state has dropped from 237 in March to just 33.
In its 6-0 decision, the court overturned a Pulaski County judge who last year ruled that the 1999 act was constitutional.
Related listings
-
Hall & Oates sue in NY over `Maneater' recording
National News 11/05/2008Daryl Hall and John Oates have filed a lawsuit saying their music publisher failed to protect their rights to their 1982 hit "Maneater."The pop duo's lawsuit says they learned in April 2007 that an unidentified singer-songwriter had used "Maneater" i...
-
Court to decide on convict's right to test DNA
National News 11/03/2008The Supreme Court will decide whether, years after his conviction, a defendant has a constitutional right to test genetic evidence found at the crime scene.The justices, in an order Monday, accepted the appeal of prosecutors in Alaska. They asked the...
-
Navy Refuses to Release McCain Car Crash Records
National News 10/20/2008Journalists say the U.S. Navy refuses to release documents about a 1964auto accident in which then-Lt. John McCain was involved, and injured,along with another man, outside the main gate of the Norfolk Navy Base.The Navy allegedly located the documen...
CHICAGO BUSINESS & CORPORATE LITIGATION LAWYERS
When faced with a legal challenge, your attorneys should help you identify your goals at the beginning of the process. Thereafter, every action that follows must be undertaken with the aim of meeting those goals. Wasted effort equals wasted time and money, that’s something you cannot afford and your attorneys must respect this concept. At Roth Law Group, we counsel our clients to confront their legal challenges aggressively, but with purpose.
As a former Marine Corps Pilot, I learned that you must assess the situation, determine your mission, construct a plan to achieve the mission and execute that plan. As an attorney and small business owner, I apply the same concepts in taking on my client’s legal challenges. And while it is generally preferable to resolve cases early in the process whenever possible, if you have no choice but to fight, you need someone who is willing to aggressively advocate for you. Here at Roth Law Group, we never back down from a challenge and we fight to win. Let our experienced attorneys put you in control of your legal challenges so you can get back to running your business.