Justice Cesar Asfor Rocha, of the 4th Panel of Judges of the Superior Court of Appeals (STJ), gave partial approval to appeal filed by the Brazilian credit card management company Fininvest S/A Negócios de Varejo (Fininvest) from the decision handed out by the Rio Grande do Sul Court State of Appeal. When considering the action for agreement review filed by the retiree Marçal Duarte, the state court barred capitalization, limited delinquent interest to 6% a year and remunerating interest to 12% a year. Such approval also allows return of money paid unduly. Supported on the established understanding of the STJ, Justice Rocha finds mutual agreement on delinquent interest of up to 12% a year is valid and therefore lifted the remunerating interest limitation.
In the action for review, the retiree claims to have entered into a personal loan agreement with Fininvest in April 2001 for R$ 1.500,00 on behalf of a family member, which loan would be repaid in several installments. Marçal Duarte was given a revolving credit card and cashed R$ 1.100.00. The retiree also used an additional R$ 2.600.00, as financed by Fininvest.
There were payment delays and Marçal Duarte started to make partial monthly payments to repay his debt. In February 2002, time action was filed with the Small Claims Court, his debt amounted to R$ 1.886,95. The retiree pleaded illegality of interest rates, both compensatory and delinquent, used by the institution and the holding of corresponding provisions null, with adjudication of a 6% annual limitation. Marçal Duarte defense strategy also sought to stop monthly capitalization and a review of charges.
When considering Fininvest’s appeal from the lower court’s decision, the STJ Reporter, Justice Cesar Asfor Rocha, clarified that, save in the case of express provision in specific law, as is the case of rural, industrial and commercial credit certificates, no financial institution is allowed to capitalize interest monthly. Therefore, he barred it in this case.
On the other hand, the delinquent and compensatory interest rates charged by Fininvest are perfectly legal. According to the reporter, STJ has a clear instruction as to the possibility of delinquent interest of up to 12% a year being charged, all in accordance with Decree 22,626/1933. As to compensatory interest rates, the Justice stated that the Second Section of the STJ decided during session of June 2003 that credit card management companies are financial institutions and in being so, are allowed to charge 12% compensatory interest a year, being inapplicable the provision in Decree 22,626/33. The Second Section upheld the validity of mandatory compliance provision contained in agreements with credit card management companies.
A transcript of the vote handed out in the special appeal is provided below:
"Special Appeal Nº 619,559 - RS (2003/0236884-7)
Reporter: Justice Cesar Asfor Rocha
Appellant: Fininvest S/A Negócios De Varejo
Appellee: Marçal Duarte
Vote.
Special Appeal. Action for Review. Credit Card. Monthly Capitalization. Repetition of Undue Debt. Compensatory and Delinquent Interest. STJ Case Law.
- Except as expressly provided in specific law, as is the case of rural, industrial and commercial credit certificates, no financial institution is allowed to capitalize interest monthly.
- It is unnecessary to present proof of error to have amounts paid unduly returned.
- Delinquent interest may be set within the limit provided in Decree n. 22,626/33, as per case law of this Court.
- As per understanding established by the Second Section, credit card management companies fall under the concept of financial institution (Special Appeal 450,453-RS, reviewed on June 25, 2003).
- Abuse in setting compensatory interest rates must be fully substantiated on a case-by-case basis, by way of proof of contractual unbalance or excessive rates, being that rates exceeding 12% annually or inflation stability in the period in question are insufficient allegations (Special Appeals ns. 407097/RS and 420111/RS).
- Special appeal partially approved."
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