Judge Strikes Citibank Interest Rate; New York Usury Rate Applies to National Bank represented by Cohen & Slamowitz LLP at Inquest

Citibank (SD) v. Hansen [1] is a consumer credit card debt collection case in which Citibank was represented by the Law Offices of Cohen & Slamowitz LLP (now known as Selip & Stylianou LLP)

The Defendant failed to make the required appearance in Court, and the court clerk scheduled the matter for an Inquest.

An Inquest is a “one-sided trial” in which the Plaintiff (in this case, Citibank), is still required to prove its case against the Defendant, even though the Defendant failed to appear to defend himself.

Citibank (South Dakota) NA was a national bank and the original creditor, established pursuant to the federal laws of the United States of America. When Cohen & Slamowitz provided the judge with copies of Citibank’s credit card billing statements, the court noted:

  1. excessive interest rate of up to 29.99% annually
  2. excessive credit card finance charges in addition to interest

The New York State usury rate is 25%. [2] This is the maximum rate of interest that a lender can charge.

National banks, like Citibank (South Dakota), NA, may be exempt from New York’s usury law. However, the Court held that in order to claim the exemption Citibank was required to prove that “at least one significant nonministerial function” [3] regarding the credit card account at issue was performed in Citibank’s home state of South Dakota. In this case, the judge found Citibank failed to prove this important fact.

Further, the court found that even if Citibank had established an exemption from New York’s usury law, Citibank offered no proof the Defendant ever agreed to the astronomical credit card interest rates it claimed.

Accordingly, the court re-calculated the impermissible interest at New York’s statutory rate of 9% and issued an Inquest decision for less than the amount claimed.

Understanding credit card math can be a little bit tricky, but can save you thousands of dollars if you present your case properly in court. Contact our law firm for a free case review.

[1] 2010 NY Slip Op 20144 [28 Misc 3d 195]

[2] NY Penal Law § 190.40

[3] 2010 NY Slip Op 20144 [28 Misc 3d 195 at 198]