Cheqnet Systems, Inc. v. State Board of Collection Agencies
Docket: 94-683
Court: Supreme Court of Arkansas; January 17, 1995; Arkansas; State Supreme Court
Appellant Cheqnet Systems, Inc. operates as a collection agency, purchasing dishonored checks from retail merchants and charging a service fee of $25.00 per check. Following a demand from the State Board of Collection Agencies and the Attorney General, which stated that the maximum allowable charge for dishonored checks is $15.00, Cheqnet filed a declaratory judgment suit to challenge this limit. The circuit court ruled in favor of the $15.00 cap, which Cheqnet appealed. Cheqnet argued that state law does not restrict its ability to impose a $25.00 service charge, asserting that the relevant Arkansas statutes only limit charges for checks returned due to insufficient funds, thus allowing for higher charges for other reasons. This argument was rejected, with the court emphasizing that the statutes clearly state the maximum charge is $15.00 per dishonored check, reflecting the General Assembly's intent to prohibit higher fees. Additionally, Cheqnet contended that the federal Fair Debt Collection Practices Act (FDCPA) allows for a $25.00 charge if agreed upon by the parties at the debt's creation or permitted by state law. While Cheqnet presented evidence that merchants posted signs indicating a $25.00 fee for returned checks, the court ruled that the FDCPA does not authorize fees exceeding state law limits or validate contracts that conflict with state public policy. The circuit court's ruling was affirmed, maintaining that Cheqnet cannot legally charge more than $15.00 per dishonored check.