Cash America 2015 Annual Report Download - page 20

compliance reviews, regulator inquiry, customer complaint or otherwise, the Company generally conducts a review
of the activity in question and determines how to address it, such as modifying the product, making customer
refunds or providing additional disclosure. The Company also evaluates whether reports or other notices to
regulators are required and provides notice to regulators whenever required. In some cases the Company has
decided to take corrective action even after applicable statutory or regulatory cure periods, and in some cases the
Company has notified regulators even where such notification may not have been required. Regulators reviewing
such incidents may interpret the laws and regulations differently than the Company has, or may choose to take
regulatory action against the Company notwithstanding the corrective measures it has taken. This may be the case
even if the Company no longer offers the product or service in question.
The CFPB has regulatory, supervisory and enforcement powers over providers of consumer financial products
and services, and it could exercise its enforcement powers in ways that could have a Material Adverse Effect.
The CFPB has been exercising its supervisory review over and examining certain non-bank providers of
consumer financial products and services, including providers of consumer loans such as the Company (and its
former e-commerce segment, Enova). The CFPB’s examination authority permits CFPB examiners to inspect the
books and records of providers of short-term, small dollar lenders, such as the Company, and ask questions about
their business practices. The CFPB’s examination procedures include specific modules for examining marketing
activities, loan application and origination activities, payment processing activities and sustained use by consumers,
collections, accounts in default and consumer reporting activities as well as third-party relationships. As a result of
these examinations of non-bank providers of consumer credit, the Company could be required to change its
practices or procedures, whether as a result of another party being examined or as a result of an examination of the
Company, or could be subject to monetary penalties, which could adversely affect the Company. Under certain
circumstances, the CFPB may also be able to exercise regulatory authority over providers of pawn loans.
In addition to having the authority to obtain monetary penalties for violations of applicable federal
consumer financial laws (including the CFPB’s own rules), the CFPB can require remediation of practices, pursue
administrative proceedings or litigation and obtain cease and desist orders (which can include orders for restitution
or rescission of contracts, as well as other kinds of affirmative relief). Also, where a company has violated Title X of
the Dodd-Frank Act or CFPB regulations implemented under Title X of the Dodd-Frank Act, the Dodd-Frank Act
empowers state attorneys general and state regulators to bring civil actions to remedy violations of state law. If the
CFPB or one or more state attorneys general or state regulators believe that the Company has violated any of the
applicable laws or regulations, they could exercise their enforcement powers in ways that could have a Material
Adverse Effect.
The Company is subject to a Consent Order issued by the CFPB, and any noncompliance could have a Material
Adverse Effect.
OnNovember20,2013,theCompanyconsentedtotheissuanceofaConsentOrderbytheCFPBpursuant
to which it agreed, without admitting or denying any of the facts or conclusions made by the CFPB from its 2012
reviewoftheCompany’sconsumerloanbusiness,topayacivilmoneypenaltyof$5million.The Company also
agreed to set aside $8 million for a period of 180 days to fund any further payments to eligible Ohio customers in
connection with the Company’s voluntary program to reimburse Ohio customers that was initiated by the Company
in 2012 in connection with legal collections proceedings initiated by the Company in Ohio from January 1, 2008
through December 4, 2012 (the “Ohio Reimbursement Program”). The Consent Order also relates to issues self-
disclosed to the CFPB during its 2012 examination of the Company, including the making of a limited number of
loans to consumers who may have been active duty members of the military at the time of the loan at rates in excess
of the interest rate permitted by the federal Military Lending Act, for which the Company made refunds of
approximately $33,500; for certain failures to timely provide and preserve records and information in connection
with the CFPB’s examination of the Company; for certain conduct in the examination process; and certain conduct
giving rise to the Ohio Reimbursement Program. The Company is subject to the restrictions and obligations of the
Consent Order, including the CFPB’s order that the Company ensure compliance with federal consumer financial
laws and develop more robust compliance policies and procedures. Furthermore, the compliance plan mandated by
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