AND NOW, this 10th day of , the Court denies the application for sumerica Net of Nevada, LLC. The Court grants the application for summary relief filed by the Department of Banking and the Secretary of Banking, and it erica’s operations are in violation of the Consumer Discount Company Act and the Act known as the Loan Interest and Protection Law.
Respectfully, I dissent. Simply, the initiative of the Department of Banking (Department) to abolish the business of payday loans in Pennsylvania has not been authorized by statute.
The Consumer Discount Company Act 1 (CDCA) does not authorize the Department’s initiative. Section 3.A provides, in relevant part, as follows:
On and after the effective date of this act, no person shall engage or continue to engage in this Commonwealth, either as principal, employe, agent or broker, in the business of negotiating or making loans or advances of money or credit, in the amount or value of twenty-five thousand dollars ($25,000) or less, and charge, collect, contract for or receive interest, discount, bonus, fees, fines, commissions, charges, or other considerations which aggregate in excess of the interest that the lender would otherwise be permitted by law to charge if not licensed under this act on the amount actually loaned or advanced, or on the unpaid principal balances when the contract is payable by stated installments[,] except a domestic business corporation organized under or existing by virtue of the Business Corporation Law of this Commonwealth, after first obtaining a license from the Secretary of Banking of the Commonwealth of Pennsylvania in accordance with the provisions of this act.
7 P.S. § 6203.A (emphasis added). From its enactment in 1937 until last year, the Department understood Section 3.A to require a lender to have a physical presence in Pennsylvania, in the form of a principal, employee, agent or broker, in order for the Department to be authorized to license that lender. Stated otherwise, the Department believed that the CDCA authorized the licensing of those engaged in intrastate, not interstate, lending. Indeed, the Department reiterated this position as recently as 2007 in litigation before this Court. 2
Cash America, a Delaware-based company licensed by Nevada, does not have a physical presence in Pennsylvania; it makes payday loans available on its website and without geographical boundaries. A borrower, whether in Pennsylvania or in some other state, must surf the Internet to find Cash America and enter into a loan transaction with it. Once on the Cash America website, the borrower must open an account and fill out an application in order to enter into a loan transaction. By clicking on a box entitled “Rates and Terms,” the borrower identifies his or her state of residence to learn what requirements, if any, apply to the applicant.
Soon, instead of living paycheck to paycheck, these borrowers find themselves living payday loan to payday loan
3 Second, amici point out that payday lending can set a trap for the financially vulnerable and unwary who may paydayloanstennessee.com/ find themselves in a no-exit cycle of debt. Specifically, by using a paycheck to repay a loan, the payday borrower is left with too little remaining in the paycheck to meet ongoing obligations. The borrower then enters into another payday loan.
In their amici curiae brief, Community Legal Services and the Pennsylvania AFL-CIO point out that Pennsylvanians, and other consumers who apply for a payday loan from Cash America, do so at their peril
In , the Department issued a “Notice to those Engaging or Considering Engaging in Nonmortgage Consumer Lending to Pennsylvania Residents” (Notice), 38 Pa. Bull. 3986 (2008). The Notice stated that