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State Attorney General May Challenge Usury as Deceptive Trade Practices
Description Arkansas high court held that the Attorney General could sue a company for charging usurious interest rates as an illegal practice under the Deceptive Trade Practices Act, which prohibits unconscionable practices.
Topic Consumer Protection
Key Words Usury
C A S E   S U M M A R Y
Facts Mid South is in the title-pawn business. Borrowers surrender their car titles as security and pay a "monthly pawn charge" that amounts to an "Annual Percentage Rate" of 304%. Mid South's contract also give it power of attorney over the borrower's vehicle and allow it to sell the vehicle upon repossession. The state of Arkansas sued Mid South, contending that its business practice constitutes unconscionable or deceptive trade practices. The trial court held that the state attorney general lacked standing to sue to challenge the practice. The state appealed.
Decision Reversed. The Attorney General has standing to enforce the Deceptive Trade Practices Act, which include the unconscionable trade practices of usury. Besides the Act, the Arkansas constitution prohibits usury. The practice involved here is based on usurious contracts, which are clearly prohibited.
Citation State v. R & A Investment Co., -- SW2d -- (1999 WL 49923, Sup. Ct., Ark.)
985 S. W. 2d 299 (Sup. Ct., Ark., 1999)

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