FL Woman allowed to sue despite arbitration clause!

January 15, 2008

FL Woman Cleared for Payday Loan Lawsuit

Tiffany Kelly will be allowed to sue the cash advance lender that charged her exorbitant interest rates on twenty-two payday loan products, says a Floridian judge. Kelly, a young single mother from West Palm Beach, has been allowed to join a class-action suit against McKenzie Check Advance of Florida, the fast cash loan merchant that does business under the banner of National Cash Advance, despite the fact that she signed a document disallowing her from legal action against the company. Judge Elizabeth Maass of the Palm Beach Circuit Court ruled that such a clause violated public policy and consumer rights.

Kelly, then twenty-four, allegedly did not understand the fine print on the paperwork she was obliged to sign as part of the application process for obtaining a three hundred dollar payday loan in 1999. She paid thirty-eight dollars in finance fees for her cash advance, which calculates out to an annual percentage rate (apr) of nine hundred eighty-eight percent. The young woman now says that she was embarrassed to be taking out a fast cash loan and did not fully grasp the penalties associated with her cash advance… not at the time of the first loan, nor when she took out an additional twenty-one personal loans from National Cash Advance over the next two years.

In 2001, the state of Florida determined that the unregulated interest rates being charged by payday loan businesses were unethical and predatory. The state enacted a fifteen percent flat interest rate cap, making the rates charged by National Cash Advance illegal. Now, Kelly will be able to take part in the class action lawsuit being brought against National and other Floridian fast cash loan businesses that took advantage of consumers. For her part, Kelly says that she has learned from her financial mistakes and developed “a little common sense” about the perils of payday lending.