Florida Supreme Court Rules That Certain Payday Loans Issed Before 2001 Were Illegal
By Desmond CarlislePayday Loan Writer
Payday advances made by short-term lending companies before a state law was passed in 2001 to regulate the industry were illegal, the Florida Supreme Court ruled Thursday.
The case involved businesses that, for a fee, issue a cash advance (also known as a payday loan) exchange for post-dated checks that will not be cashed until a later date.
The issue at hand is the fees involved with the service, which exceeded the 18 percent legal limit and the 45 percent level that is considered criminal, according to Christopher Casper, a Tampa lawyer who has filed several lawsuits that are on hold pending the ruling.
"We are going to make every effort to prosecute these claims through class action. There's a lot of victims out there. We're talking about hundreds of thousands of people," Casper said.
Justice Raoul Cantero dissented from the otherwise unanimous opinion in favor of one of Casper's clients, Wendy Betts of Winter Springs, Fla., who sued McKenzie Check Advance of Florida (doing business as National Cash Advance) for herself and other consumers. A trial judge in Palm Beach County dismissed the suit, but it was reversed by the 4th District Court of Appeal. The Supreme Court affirmed the appellate court's decision.
Casper plans to seek class action certification for Betts' suit and others against traditional and online payday loan companies. The suits on behalf of customers who obtained cash advances before the state's payday loan law went into affect on Oct 1, 2001 may be hindered by one particular obstacle:
Clauses in the payday loan contracts provide for arbitration instead of lawsuits to resolve complaints.
"We don't think that the loan sharks should be able to use procedural tricks," said Casper, who will argue that those clauses should be voided or that they be arbitrated on a class action basis instead of individually.
The damages could result in double the interest paid plus the principal of all faxless payday loans issued to each customer. The payday cash advance loans commonly are known as such because they are designed to tide workers over until they get their paychecks. It will be interesting to monitor this case as the legal battle for payday loan legitimacy continues in Florida.
