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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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The Fulton County Superior Court has ruled that Georgia Insurance Commissioner John W. Oxendine may investigate the records of Advance America, a payday lender, according to the Fulton County Daily Report. Trisha Renaud, Financial Outfits Lose Bid to Block Oxendine Inquiry, Fulton County Daily Report, March 3, 2003, at 1,1 (“Daily Report”). The purpose of Oxendine’s investigation was to determine whether Advance was operating its lending business without a license required for a Georgia Industrial Loan company. Daily Report at 5. The company was suspected of “renting” an out‑of‑state bank in order to make loans and claim exemption from the Georgia Industrial Loan Act. Daily Report at 1.

Advance and its banking partner, BankWest, a South Dakota bank, filed a motion to quash subpoenas that had been issued by Oxendine for records located at Advance’s Macon, Georgia office. Daily Report at 5. In an order denying that motion, Judge Doris L. Downs said that “’[i]f the Commissioner were unable to investigate any person claiming to be exempt he would be powerless to challenge unfounded or fraudulent claims of exemption. Such an interpretation of the statutory scheme is absurd, and interpretations that lead to absurd consequences are error.’” Daily Report at 5, quoting Down’s February 19, 2003 Order. The court also refused to rule on the issue of whether Advance was exempt under the GILA. Daily Report at 5. An appeal has been filed. Id.

The actions of the Georgia Insurance Commissioner illustrate the increasing scrutiny being given by regulatory authorities to so‑called “payday lending” operations.

Mike Tomkies and Margaret Stolar