Kansas law requiring license for Internet payday lenders.

A Kansas law requiring Internet payday lenders to obtain a license to do business in the state does not unduly burden interstate commerce, a federal appeals court has ruled.
The law imposes a variety of requirements on payday lenders, including a license initially costing $425; a surety bond of $500 per year; and a criminal background and credit check. The law also prohibits charges of more than 36 percent a year on unpaid balances of $860 or less and charges of more than 21 percent a year on unpaid balances of more than $860.
On appeal, Quik Payday argued that the law regulates interstate commerce that happens entirely outside of Kansas. For example, it said that if a Kansas resident communicated with Quik Payday via his or her office computer in Missouri, Quik Payday would have to assume that the customer is actually in Kansas and comply with the law.
The court, however, noted that even if a Kansas resident applied for a loan on a computer in Missouri, other aspects of the transaction — for example, the transfer of the payday loan funds — were likely to take place in Kansas. It said that Quik Payday failed to explain why it simply couldn’t ask customers which state they were in when communicating with the company.

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