There is no cap on the interest rate a short term lender can charge a person who takes out a short-term loan in Wisconsin, the La Crosse Tribune reports.
This caused Jessica Mount - who at one point was forced to pay $1,177 in interest on a $350 loan from Short term Loan Store in La Crosse - to default in small claims court. Mount contested the decision, and was awarded $10,611 by a county circuit judge. Short term countered by taking the case to the District 4 Court of Appeals. At that point it was determined the decision would affect consumer credit transactions across the state, and it was subsequently taken to the Supreme Court. According to WGBA-TV, annual interest rates at Short term varied from 446 percent to 1,300 percent. Mount was forced to sign new contracts after each loan she took out, which waived many of her rights under the Wisconsin Consumer Act. However, Mount's attorney, Eric Crandall, believes asking someone to pay more than 1,000 percent interest on a short-term loan is "unconscionable," and asks that because the rates were so excessive, they be voided. Matthew Cornetta, Payday's counsel, countered that because the WCA doesn't cap interest rates, courts should be prevented from determining whether a rate should be voided.