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Monday, February 01, 2010

Ind. Decisions - " Court Rejects Cross-State Rules on Car Title Lenders"

The 7th Circuit ruling January 28th in the case of Midwest Title Loans v. David H. Mills, Dir, Ind. Dept. Financial Institutions (see ILB summary here) is the subject of a story today by Annie Youderian of Courthouse News Service:

An Indiana law imposing interest rate caps on out-of-state car title lenders unconstitutionally burdens interstate commerce, the 7th Circuit ruled.

The Chicago-based appellate panel shot down a law that forced an Illinois car title lender to get an Indiana license to make consumer loans. That license made Midwest Title Loans subject to Indiana's regulations on predatory lending, including a ceiling on the annual interest rate that a lender may charge. If the lender doesn't get an Indiana license, the borrower doesn't have to repay the loan and is entitled to a refund of excess interest payments.

Judge Richard Posner noted Indiana's interest in protecting its citizens from predatory lending, but said the Constitution's dormant Commerce Clause bars "extraterritorial regulation." * * *

"To allow Indiana to apply its law against title loans when its residents transact in a different state that has a different law would by arbitrarily to exalt the public policy of one state over that of another."

Posted by Marcia Oddi on February 1, 2010 02:16 PM
Posted to Ind. (7th Cir.) Decisions