99 percent per month. In 2014, Boling resolved his suit against the gas can manufacturer. Shortly thereafter, Prospect sent Boling a “Schedule of Purchases,” asserting that Boling owed Prospect $340,405.

Boling filed suit against Prospect in Kentucky, arguing that the four agreements were void and unenforceable under Kentucky statutes prohibiting usury. Kentucky’s statute states, in relevant part, that the maximum permissible per annum rate of interest on a loan was 4 percent plus the rate of the Federal Reserve Bank in the relevant district or 19 percent, whichever is less. The Federal Reserve Bank’s rate at the time was approximately 1 percent. Prospect argues that the agreements were not loans, so the usury statute does not apply. Do the math:

Did Prospect violate Kentucky’s statute? How do you think the court ruled on the issue of whether the agreements were loans?