Court: Check Cashers Act violates constitution

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By The Associated Press

LITTLE ROCK — The Arkansas Supreme Court ruled Thursday that the 1999 Check Cashers Act "unmistakably" allowed payday lenders to charge triple-digit interest rates in violation of the state constitution.

In a 6-0 decision, the court overturned a Pulaski County judge who last year ruled that the 1999 act was constitutional after justices sent the case back to his court without ruling on the law itself.

The state constitution limits interest rates on loans to 17 percent.

Justice Paul Danielson wrote in the court decision Thursday that the act "clearly and unmistakably conflicts" with the constitution.

"In sum, because the check cashers act clearly authorizes loans charging usurious rates of interest in contravention of the limit set forth in Article 19 Section 13, we hold that the act in its entirety clearly and unmistakably conflicts with the Arkansas constitution and is unconstitutional," the ruling states

The court agreed with opponents of the act in finding that fees allowed under the law were essentially interest.

"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," Danielson wrote.

Read tomorrow's Arkansas Democrat-Gazette for full details.

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