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A company that has used phone card sales to dial for dollars with customers in need of quick cash must stop that aspect of its business, according to a ruling by Georgia Insurance Commissioner John W. Oxendine. Oxendine issued a cease-and-desist order requiring the company, known as Cash in Advance of Florida or Cash N Advance, to stop making small loans in Georgia. The attorney for Cash in Advance, Thomas C. James III of James, Bates, Pope & Spivey in Macon, Ga., had argued in an earlier hearing that such an order would put his client out of business. Cash in Advance has 20 locations throughout the state. Since June, it has offered cash advances from $100 to more than $1,000 to customers. To get the advances, customers sign yearlong contracts to buy phone cards. For example, a customer who got a $500 advance would have to buy 10, 100-minute phone cards each month for a year at a cost of $22.50 per card. The total tab: $2,700. Or, the customer could terminate the contract early and pay a termination fee equal to the amount of the cash advance plus about 30 percent — in this example, $650. At an administrative show-cause hearing in Macon in September, lawyers from Oxendine’s office argued that the deals were cleverly disguised payday loans, in which phone cards with little value were used as a cover for loans with interest rates as high as 540 percent — illegal under the Georgia Industrial Loan Act. ONLY RETAIL SALES? Lawyers for Cash in Advance argued that these were simply retail sales of phone cards, and that the contract specifically said there was no “requirement” — a key factor triggering the Georgia Industrial Loan Act — that they repay the advance itself. James, Cash in Advance’s lawyer, said that Oxendine “probably has exceeded his authority” with this order because the Georgia Industrial Loan Act deals with the definition of a loan. “We don’t think this is a loan,” he said. Margaret M. Witten, counsel to the Georgia Department of Insurance’s enforcement division, argued the case with enforcement division lawyer E. Jane Simpson. Witten said she’s pleased with the decision, but added, “We expect an appeal on this one.” “We definitely will appeal,” said James. He said that he also planned to file a motion in Turner County Superior Court on Tuesday to stay Oxendine’s order. Oxendine’s office also pursued two other companies and their officers in this action. Those companies, Quick Touch Communications Inc. and Phone Cash USA Inc., are vendors that sell phone cards to retailers such as Cash in Advance. Their lawyers argued that their clients should be dismissed because they had not sold phone cards in Georgia. Oxendine agreed, saying in his order, “While their activities may well have enabled, facilitated or even encouraged the activities of Cash in Advance, the Commissioner is unable to find a legal basis for exercising jurisdiction over them.” In re Cash in Advance, No. ED-2002-008 (Industrial Loan Commissioner Order, Oct. 29, 2002). W. Keith McGowan and former State Bar of Georgia President James B. Franklin of Franklin, Taulbee, Rushing, Snipes & Marsh in Statesboro, Ga., represented Quick Touch and Phone Cash USA. They could not be reached for comment.

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