State Supreme Court Hears Arguments in Payday-Lending Case

by Mike Bevel, CollectionIndustry.com

Arkansas?s Supreme Court is being asked to lay a smackdown on payday lenders in the state. Specifically, the Court is being asked to repeal the state’s Check Cashers Act, since it seemingly allows payday lenders to issue loans with triple-digit interest rates.

Arkadelphia attorney Todd Turner also decided that the Supreme Court needed schooling in the law, reminding the Justices that the state could be subject to a claim for illegal exaction for the license fees it collects from payday lenders in the state.

Turner said the act, passed by the Legislature in 1999, violates the state constitution because it allows payday lenders to make consumer loans with interest rates of more than 17 percent annually.

The Arkansas State Board of Collection Agencies is not feeling the Todd Turner love. Payday lenders fall under the Board?s jurisdiction, and Tom Thrash, an attorney for the board, told justices that Turner’s clients should have gone to the board before taking the complaint to court.

“They have not exhausted their administrative remedies,” Thrash said. “They should have raised the issue with the board.”

Justices appeared skeptical of the notion of taking the complaint about the board and the check cashers law before the board itself.

“Who do the petitioners sue?” Justice Annabelle Clinton Imber said. “You’re petitioning with the party that you’re going to sue.”

Turner’s argument before the justices focused almost entirely on the constitutionality of the Check Cashers Act. Turner said the group’s main focus is on overturning the law allowing payday lenders to operate.

“Our main focus is to try and get the statute struck down,” Turner told reporters.