The Department’s change in its policy reflected in the Notice is based on its experience in dealing with the rise of Internet lending and its special knowledge of how such loans can affect the social life of the community
If the Court sees any ambiguity in Section 3.A of the CDCA, the Department suggests that its specialized experience with Internet lending supports its interpretation. Cash America maintains that the Department’s abrupt change in longstanding policy is not due any deference. It relies on RAG Cumberland Resources LP v. Department of Environmental Protection, 869 A.2d 1065 (Pa.Cmwlth.2005), where the department changed its interpretation of the statutory term “shift” for mine inspection purposes; the Court stated that any deference due to the department in that case must yield to evidence that the new interpretation was an abrupt volte face from the interpretation that it had followed for more than thirty years.
Cash America decries the Department’s citation to NCAS on the basis that the lender involved there had many in-state offices
The parties offer essentially opposite interpretations of Section 3.A of the CDCA. Although the Department formerly endorsed a contrary interpretation of that section, the Court is convinced that the Department’s current interpretation is the correct one. A is based almost entirely on its insistence that the phrase “either as principal, employe, agent or broker” modifies only the preceding phrase “in this Commonwealth[.]” The Court agrees that in the full context, however, “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 [of a specified nature],” the phrase modifies and defines “person” who engages in the business of making specified loans rather than modifying and limiting the meaning of “in this Commonwealth.” The Department’s point is well taken that this language expands coverage of the act to encompass employees, agents and brokers in the same manner that the CDCA applies to charges and fees beyond interest.
Cash America contends that arguments based upon the Pennsylvania Long Arm payday loans Ohio Statute are irrelevant because this case does not present the question of whether the exercise of jurisdiction over a nonresident by Pennsylvania courts was constitutionally permissible. In its reply brief, Cash America does not dispute that the Commonwealth would have authority to apply its law to Cash America if the legislature intended to do so. The issue is whether it in fact intended to do so.
Cash America argues that the legislature could not have intended to reach out-of-state lenders with no physical presence in 1937 based on prevailing Commerce Clause jurisprudence. The Department responds that Cash America is asking the Court to speculate more than 70 years after the fact as to a particularly sensitive area of constitutional law. The legislature in 1937 clearly saw usurious consumer lending as a threat from which Pennsylvania residents needed protection. The Department maintains that the CDCA, as drafted in general terms, applies to situations not existing in 1937. See Philadelphia Retail Liquor Dealers Ass’n v. Pennsylvania Liquor Control Board, 360 Pa. 269, 274, 62 A.2d 53, 55 (1948) (“[S]tatutes framed in general terms apply to new cases that arise, and to new subjects that are created, from time to time, and which come within their general scope and policy.”) (quoting Commonwealth v. Quaker City Cab Co., 287 Pa. 161, 166, 134 A. 404, 406 (1926), rev’d on other grounds, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927 (1928)).
The opinion in that case, however, expresses forcefully the Supreme Court’s view of payday lending as essentially a predatory lending practice and also observes throughout the text of the opinion the methods used by usurious lenders, often involving subterfuge, to attempt to circumvent fundamental public policy. The Supreme Court noted the well-established principle articulated over 100 years ago in Earnest v. Hoskins, 100 Pa. 551 (1882), that the Commonwealth’s public policy prohibits usurious lending, and it cited a decision entered almost 70 years ago in Geier, holding that it is well settled in constitutional law that the regulation of interest rates is a subject within the police power of the state particularly when it comes to cases involving small loans, which profoundly affect the social life of the community. 6