Georgia Payday Lending Law

A payday loan provides a cash advance to a borrower until their next payday. According to the Consumer's Union, payday loans have extremely high interest rates that can trap low-income residents into a cycle of debt. The state of Georgia has legally banned payday loans for over 100 years. Because some payday lenders circumvented the ban, the state legislature added to the Georgia Code Chapter 17 (Payday Lending) Title 16 (Crimes and Offenses), which clearly defines what activities are considered payday lending and legislates criminal and civil penalties for offenders.

Regulations

Under 16-17-2 of the Georgia Code, payday loans are small loans underwritten within the state in the amount of $3,000 or less. The state allows businesses to issue loans of less than $3,000 if such companies operate under the rules of the Credit Card and Credit Card Banking Act, have residential mortgage statues or are a licensed state or federally chartered credit union or bank. Even with legal lending, the state prohibits the annual simple interest rate on loans from exceeding 16 percent per annum, according to Section 7-4-2 of the Georgia State Code.

Considerations

Under Section 16-17-1 of the Georgia Code, the state does not prohibit interstate payday loans. Georgia residents may obtain a payday loan in another state. State law allows short-term loans in the form of car title loans, retail installment plans and pawnshop loans. These types of loans are backed by real property which the lender will collect if the borrower doesn't make payments. Under Section 16-17-2(a)(4), refund anticipation loans do not count as payday loans, but the loan cannot total more than the amount of a filer's anticipated tax refund.

Civil Penalties

Per Section 16-17-4(a), the Attorney General of Georgia or any district attorney within the state will hold a payday lender civilly liable in the form of a penalty adding up to three times the amount of any interest that the borrower paid in an unlawful transaction. The state receives half this money and the district attorney receives the other half. In addition, the state will tax any illegally made payday loans at a rate of 50 percent, an amount added onto existing penalties. According to Section 16-17-7 of the Georgia Code, an interstate financial corporation will be barred from doing any business in Georgia and will have its existing corporate certificate revoked if it is caught making payday loans.

Criminal Penalties

Per Section 16-17-2 of the Georgia Code, the Attorney General or a district attorney will hold any person who issues a payday loan in the state criminally liable. The penalty for issuing a payday loan is an aggravated misdemeanor with imprisonment of not more than one year and a fine of up to $5,000 per violation. Each payday loan counts as one offense under Georgia law. Any person convicted of violating payday loan laws on three previous occasions will receive a fine of $10,000 and five years imprisonment.