Hamilton v. York
United States District Court for the Eastern District of Kentucky
987 F. Supp. 953 (1997)
- Written by Heather Whittemore, JD
Facts
Larry York, doing business as HLT Check Exchange, LLP (HLT) (defendant), operated a check-cashing company in Kentucky. Consumers would give HLT a check in exchange for cash. HLT would hold the check for two weeks before cashing the check or giving the check back to consumers in exchange for the amount on the check. HLT charged a fee of 20 percent for its services. Consumers could extend the transaction for a week—giving them extra time to pay HLT or put money in their checking account—for an additional 10 percent fee. Gregory and Dana Hamilton (plaintiffs) used HLT’s check-cashing service. The Hamiltons eventually sued HLT in federal district court, alleging that HLT violated Kentucky’s usury laws—which capped interest rates on loans of less than $15,000 at 19 percent—and the Racketeer Influenced and Corrupt Organizations Act by charging unlawfully high interest rates. The Hamiltons argued that although HLT referred to its service as check cashing, it was in substance a short-term loan with an annual interest rate of 520 percent. HLT moved to dismiss the Hamiltons’ complaint, arguing that the fees it charged were service fees for cashing checks, not interest on loans.
Rule of Law
Issue
Holding and Reasoning (Hood, J.)
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