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Court Upholds Kansas Lender-Licensing Law

(CN) - The 10th Circuit upheld a Kansas law requiring Internet payday lenders to obtain a license to do business in the state. A three-judge panel said the law does not regulate out-of-state business or unduly burden interstate commerce.

Quik Payday, a business headquartered in Utah, has lent money to 972 Kansas residents through its Web site.

A customer complained in June 2005, and the state learned that Quik Payday didn't have a Kansas business license. The state ordered the company to stop doing business in the state, pay a $5 million civil penalty, and return all fees, profits and interest from the 3,079 loans it made to Kansans.

Quik Payday responded by challenging the state's consumer-lending laws.

The federal appeals court in Denver said the plaintiff's misconduct "was a simple failure to get a Kansas license," and that "requiring a license in each state does not impose an undue burden."

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