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ARTICLE · 08 JUNE 2007

Perspective: Internet Conduct That Crosses The State Line?

Duane Morris LLP
Duane Morris LLP
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Illinois has just ordered Global Payday Loan to stop issuing loans to state residents. It also has fined the company $234,000 for charging excessive interests rates. But the decision raises the broader question of whether states should regulate Internet conduct that crosses state lines.

United StatesMedia, Telecoms, IT, Entertainment
Eric Sinrod
Eric Sinrod
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Reprinted with permission from CNet.com.

Illinois has just ordered Global Payday Loan to stop issuing loans to state residents. It also has fined the company $234,000 for charging excessive interests rates. But the decision raises the broader question of whether states should regulate Internet conduct that crosses state lines.

The investigation began after a complaint from someone who borrowed $300. The loan in question fell under an Illinois provision that capped annual finance charges at 36 percent.

State investigators found serious problems with the transaction. For one thing, the loan was written with a six-day term, which did not give the borrower sufficient time to repay the loan. Furthermore, the fees on the loan exceeded the $15.50 per $100 allowed under Illinois law.

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