Who’s Getting Used in Arkansas: An Analysis of Usury, Check Cashing, and the Arkansas Check-Cashers Act


by Joseph R. Falasco |

“Consider the following hypothetical. Ms. Luebbers needs immediate cash for food, and her checking account at Arkansas Bank does not contain the necessary balance. Therefore, she goes to Check Cashers, Inc. and issues a personal check for $400 payable to its order. Luebbers is the drawer of the check, Check Cashers, Inc. is the payee, and Arkansas Bank is the drawee. By written contract executed between the parties, Check Cashers, Inc. agrees not to present or deposit the check for fourteen days. Ms. Luebbers is given the right to repurchase her check for face value until the fourteen-day period expires. In consideration for the check, Check Cashers, Inc. gives Ms. Luebbers $350 (in effect charging her $50). The $50 charge represents two separate fees: 1) 10% of the face value of the check (that is, $40), plus 2) a $10 service fee for holding the check for fourteen days. If Luebbers does not repurchase the check, Check Cashers, Inc. can either deposit the check in its own depositary bank or present it to the drawee bank for payment, thus completing the deferred presentment check-cashing transaction. This simple hypothetical has presented controversial issues of legislation relating to usury in Arkansas.”

Note: The above is an excerpt from the article in the University of Arkansas Law Review. Click the link below to read the actual publication.