Consequently, we conclude that the portion of § 16-17-3 that voids an out-of-state bank’s loan procured by an in-state agent under a prohibited agency agreement is not preempted
Any person who violates subsection (a) or (b) of Code Section 16-17-2 shall be barred from the collection of any indebtedness created by said loan transaction and said transaction shall be void ab initio, and any person violating the provisions of subsection (a) or (b) of Code Section 16-17-2 shall in addition be liable to the borrower in each unlawful transaction for three times the amount of any interest or other charges to the borrower.
Ga.Code Ann. § 16-17-3. Because out-of-state payday loans in Greenhills banks are exempt under §§ 16-17-2(a) and (b) and, thus, cannot violate subsection (a) or (b), it is clear that the civil-damage penalty and the collection-of-indebtedness bar in § 16-17-3 do not apply to out-of-state banks.
If the payday stores’ loan-procurement practices violate the host state’s consumer protection laws, then Georgia has the power to void the loan procured by the payday store in an illegal manner
The remaining part of § 16-17-3 does impact out-of-state banks. If an in-state payday store procured a payday loan in the bank’s name through a prohibited agency agreement with the out-of-state bank, § 16-17-3 does make that payday loan void in that limited circumstance. Therefore, we must consider whether § 16-17-3 is preempted by § 27(a).
It is important to understand that the Georgia Act does not void the payday loan because of the interest rate on the loan. If the payday store procures a high-interest-rate loan for the out-of-state bank and does not retain over 50% of the revenue, § 16-17-3 has no application to the out-of-state bank’s high-interest-rate loan. Rather, Georgia has instituted this penalty – voiding the loan – only for loans procured by payday stores for out-of-state banks under a prohibited agency agreement. Georgia voids the loan due to the payday store’s violation of Georgia’s law, § 16-17-2(b) (4), prohibiting certain agency agreements in the procurement of payday loans.
Section 27(a) does not serve as an all-powerful shield that protects an out-of-state bank’s loan no matter what procurement or collection conduct the bank’s agent engages in. As detailed above, even the FDIA reserves an important and primary role for the states in the regulation of state banks, and the host state’s fraud and consumer protection laws still apply to out-of-state banks operating in the host state.
Although the plaintiffs raise this issue, they devote very little attention to the issue in their briefs. Likewise, we quickly resolve this issue.
The Commerce Clause states that “Congress shall have Power . [t]o regulate Commerce . among the several States. ” U.S. CONST. art. I, § 8, cl. 3. Although the Commerce Clause directly limits the power of Congress, it is well established that the Commerce Clause has a “dormant” or “negative” aspect as well; that is, that the Commerce Clause serves as “a substantive restriction on permissible state regulation of interstate commerce.” Dennis v. Higgins, 498 U.S. 439, 447, 111 S. Ct. 865, 870, 112 L. Ed. 2d 969 (1991) (internal quotation marks omitted). “This `negative’ aspect of the Commerce Clause prohibits economic protectionism – that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273-74, 108 S. Ct. 1803, 1807, 100 L. Ed. 2d 302 (1988). The Commerce Clause also serves to prevent states from “ventur [ing] excessively into the regulation of . [interstate] commerce . [and] trespass [ing] upon national interests. ” Kassel v. Consol. Freightways Corp. of Del., 450 U.S. 662, 669, 101 S. Ct. 1309, 1315, 67 L. Ed. 2d 580 (1981) (internal quotation marks omitted).
