LITTLE ROCK, Ark. -- Arkansas Attorney General Dustin McDaniel has sent letters to 60 companies which run payday lending operations in the state asking that they shut down operations immediately or face likely lawsuits from his office, according to media reports.
The Arkansas constitution bars lenders from charging more than 17% interest and the payday lending industry successfully supported legislation that passed in 1999 which specified that payday lenders' fees "shall not be deemed interest," according to the state. But the state's Supreme Court issued opinions last month which made it clear that the law did not provide blanket protection against the Constitution's interest limit, media reports said.
In his comments a press conference announcing the letters, McDaniel reportedly warned payday lenders that the license from the state will not protect them now that the Supreme Court has ruled.
"If you violate the laws and constitution of this state," McDaniel is quoted as saying, "it doesn't matter if you have a license hanging on your wall."