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
reports
today that Attorney General Lori Swanson has 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.
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