Allina case case
spotlights illegal interest rate issue.
With
certain exceptions, it has long been illegal to charge more
than 8% interest under a written contract in
Minnesota. And if there is no written contract, the
highest allowable interest rate is 6% under the general rule
applicable to most contracts.
KARE11.com
reported that Attorney General Lori Swanson reached a
settlement with Allina that will reimburse patients who paid
more than 8% interest to the health care company.
This puts the spotlight on an issue that is rarely discussed
and apparently little understood. It is very, very
common to see invoices with a notation at the bottom that
interest at the rate of 1.5% per month will be charged on
balances not paid when due. Although there are
exceptions to the 6% and 8% interest caps, most if not all of
the invoices charging 1.5% per month are not subject to any of
the exceptions.
When a practice like this becomes as common as it has been,
people tend to believe that it must be legal because
everybody's doing it.
No doubt it would surprise most small businesses to learn that
they not only might not be able to recover any interest at all in
this situation, but they might not even be able to recover the
underlying debt, because there is a Minnesota statute that
declares that usurious contracts are void.
Please see the
Terms
and
Conditions of Using this web site
