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  1. #1
    Join Date
    Nov 2008
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    46

    Default Illegal Rates of Interest

    My question involves a banking matter in the State of: Arkansas.

    One year ago, I applied and was approved for a Wal-Mart credit card. I do not remember what the starting interest was, but you will soon find that that is irrelevant.

    As I read Article 19 of the state constitution (I actually read that for fun, imagine that), under section 13, subsection b, found at http://www.sos.arkansas.gov/ar-const...rcart19-13.htm, it states, "All contracts for consumer loans and credit sales having a greater rate of interest than seventeen percent (17%) per annum shall be void as to principal and interest and the General Assembly shall prohibit the same by law." This is in the state Constituion, meaning the supreme law of the state, and as far as I can tell, no amendment has been passed to revoke this particular clause.

    A credit card purchase is a credit sale, so, smelling a rat, I emailed Wal Mart and asked what my interest rate was. They responded (and I even have a screenshot of this email to prove it, in case they hack my Wal-Mart email account and modify their response) that my APR is 24.99%.

    I understand that corporate juggernauts like Wal-Mart like to twist laws such as this to create loopholes, but this part of the state constitution seems perfectly cut and dry. You cannot really ask the court or jury "what is 'just compensation?'" or "what is an 'unreasonable search and seizure?'" The only way this clause can be manipulated is if the dictionary definitions of "contract," "credit sale," "rate of interest," "seventeen," "annum," "principal," or "interest" were as vague as "reasonable" or "just," but they are not; this clause is exceptionally cut and dry. Even if the judge wanted to, I am hard pressed to see how he could manipulate the wording of this clause to give Wal-Mart the advantage without inciting a riot (although, I won't say that to the jude's face, for obvious reasons).

    Since Wal-Mart is also in Arkansas, state law applies here. Also, even if they use a bank from another state (which they probably do), I believe I have met the minimum contacts requirement to sue on my "home turf," for lack of a better term., especially considering the only contact I've had with the out-of-state bank has been either on the Internet, or through my local Wal-Mart store.

    Would I have a chance at a small-claims suit, so I do not have to go through the expense of a lawyer, jury screening, and all that? Arkansas small claims court is for cases less than $5,000, and they must be over certain types of cases, usually breach of contract. However, if I were being sued for, say, defaulting on a credit loan, it would be perfect in small claims court. Does it also work the other way around?

    EDIT: Also, before anyone says "If this was illegal they probably would have seen it by now," remember all these fortune 500 companies who need federal bail outs because of their executives overlooking problems much bigger than this. Besides, I don't know anyone (even lawyers that I've talked to) who actively reads the state consitution the way people read Harry Potter. It's entirely possible that this is just another oversight.

  2. #2
    Join Date
    Apr 2008
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    Texas (Dallas area)
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    1,404

    Default Re: Illegal Rates of Interest

    Just so you know Walmart does not own nor they issue any of their credit card accounts.

    All Walmart accounts are owned and issued by GE Money Bank in Texas. When you open a Walmart credit card it has on the "terms of use" that you agree to abide by the laws of TEXAS. Use of the card accepts these terms. It is in that fine print stuffer that no one reads. Well I read them of course

  3. #3
    Join Date
    Dec 2007
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    Ohio
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    Default Re: Illegal Rates of Interest

    Well I read them of course
    And thank goodness you do!! I know who I'm coming to if I ever need help!

  4. #4
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    Apr 2008
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    Texas (Dallas area)
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    Default Re: Illegal Rates of Interest

    Quote Quoting gigirle
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    And thank goodness you do!! I know who I'm coming to if I ever need help!
    The laws are changing in mid 2010, the banks will no longer be able to pull any of this. I mean really, 42% if you become 30 days late on your Chase card.

    Potato - Pototo
    Tomato - Tomoto
    Bank - Mafia

  5. #5
    Join Date
    Dec 2007
    Location
    Ohio
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    2,006

    Default Re: Illegal Rates of Interest

    Quote Quoting OhMy
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    The laws are changing in mid 2010, the banks will no longer be able to pull any of this. I mean really, 42% if you become 30 days late on your Chase card.

    Potato - Pototo
    Tomato - Tomoto
    Bank - Mafia
    How right you are!

  6. #6
    Join Date
    Nov 2008
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    46

    Default Re: Illegal Rates of Interest

    Quote Quoting OhMy
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    Just so you know Walmart does not own nor they issue any of their credit card accounts.

    All Walmart accounts are owned and issued by GE Money Bank in Texas. When you open a Walmart credit card it has on the "terms of use" that you agree to abide by the laws of TEXAS. Use of the card accepts these terms. It is in that fine print stuffer that no one reads. Well I read them of course
    That would almost work, except...

    That law that states that you can choose what state your contract's law is applied in is an Arkansas statute. The rate of interest law that I am wanting to exploit is from the CONSTITUTION.

    In the words of one of the earliest Supreme Courts, "The Constitution is the supreme law of the land. If there is a conflict between the Constitution and any other law, the Constitution has the supreme authority."

    When a statute is manipulated to allow a contractor to do something that is otherwise unconstitutional, shouldn't that be unconstitutional?

  7. #7
    Join Date
    Apr 2008
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    Texas (Dallas area)
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    Default Re: Illegal Rates of Interest

    Quote Quoting stebbinsd
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    That would almost work, except...

    That law that states that you can choose what state your contract's law is applied in is an Arkansas statute. The rate of interest law that I am wanting to exploit is from the CONSTITUTION.

    In the words of one of the earliest Supreme Courts, "The Constitution is the supreme law of the land. If there is a conflict between the Constitution and any other law, the Constitution has the supreme authority."

    When a statute is manipulated to allow a contractor to do something that is otherwise unconstitutional, shouldn't that be unconstitutional?
    Well the bank has specific wording that says. IF YOU USE THE CARD YOU AGREE TO ABIDE BY THE LAWS OF TEXAS.

    At that point it would be up to you to call and cancel your card before use. Federal law states they have the right to do this. As of mid 2010 they will NOT be able to do this but for now they sure are.

    I am not going to argue because I AGREE with you. Many have fought this before and they all lost.

    All I am telling you at this point is to either pay the excessive interest rate or do not carry a balance.

    Federal law and Texas law is what they are using for now. Hey, I have the same Walmart card you do. I pay it in full every month and I just shake my head in shock when I see what interest rate I would have to pay if I did carry a balance.

    Federal law states that if a lender wants you to follow the specific law of a state, the lender must have an office in that state and you must obide. Is it right for this to happen?? NO, thats why the law was changed, however, it is not going to in force until mid 2010.

  8. #8
    Join Date
    Nov 2008
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    Default Re: Illegal Rates of Interest

    Quote Quoting OhMy
    View Post
    Well the bank has specific wording that says. IF YOU USE THE CARD YOU AGREE TO ABIDE BY THE LAWS OF TEXAS.

    At that point it would be up to you to call and cancel your card before use. Federal law states they have the right to do this. As of mid 2010 they will NOT be able to do this but for now they sure are.

    I am not going to argue because I AGREE with you. Many have fought this before and they all lost.

    All I am telling you at this point is to either pay the excessive interest rate or do not carry a balance.

    Federal law and Texas law is what they are using for now. Hey, I have the same Walmart card you do. I pay it in full every month and I just shake my head in shock when I see what interest rate I would have to pay if I did carry a balance.

    Federal law states that if a lender wants you to follow the specific law of a state, the lender must have an office in that state and you must obide. Is it right for this to happen?? NO, thats why the law was changed, however, it is not going to in force until mid 2010.
    Federal Law only applies in disputes of Intellectual Property or of damages of at least $75,000. My balance at this point in time is less than $700.

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