Cash America 2007 Annual Report Download - page 30

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10
require each pawnshop dealing in guns to maintain a permanent written record of all receipts and
dispositions of firearms.
Cash Advance Regulations
The Company offers cash advance products in most of its pawnshops, in all of its cash advance
locations and over the internet. Each state in which the Company originates cash advance products,
including cash advances made online, has specific laws dealing with the conduct of this business. The same
regulations generally apply to cash advances made both in physical lending locations and online. These
laws and regulations typically restrict the amount of finance and service charges that may be assessed and
limit the customer’s ability to renew or extend these cash advances. In many instances, the regulations also
limit the aggregate amount that a provider may advance (and, in some cases, the number of cash advances
the provider may make) to any one customer at one time. Cash advance lenders typically must be licensed
by the state licensing authority in order to offer the cash advance product in that state. Some states require
cash advance lenders to report their customers’ cash advance activities to a state-wide database, and such
lenders are generally restricted from making cash advance loans to customers who may have a certain
amount of cash advances outstanding with other lenders. Depending upon the severity of a violation, failure
to observe a state’s legal requirements for cash advance lending could result, among other things, in a loss
of cash advance licenses in that state, the imposition of fines or customer refunds, and other civil and/or
criminal penalties. The Company must also comply with the various disclosure requirements under the
Federal Truth in Lending Act (and Federal Reserve Regulation Z under that Act) in connection with
disclosing the interest, fees, total payments and annual percentage rate related to each cash advance
transaction. The cash advance business is also subject to various laws, rules and guidelines relating to the
procedures and disclosures needed for debiting a debtor’s checking account for amounts due via an ACH
transaction. Additionally the Company must comply with the Federal Fair Debt Collection Practices Act
and similar state collection practices laws with respect to its collection activities related to cash advances.
Furthermore, with respect to online cash advances, the Company is subject to various state and federal e-
signature rules mandating that certain disclosures be made and certain steps be followed in order to obtain
and authenticate e-signatures. Additional federal regulations governing cash advance businesses are
described in Other Regulations Affecting Lending Operations below.
As of December 31, 2007, the Company made available cash advance products offered by third-
party lenders in 319 of its 735 locations. Certain states require that the Company be registered or licensed
under state law in order to perform the administrative services that it performs for the third-party lenders.
The Company began offering the CSO program in Texas, Michigan and Florida in July 2005. The
Company discontinued the CSO program in Michigan in February 2007 and has since offered only cash
advances underwritten by the Company to customers in that state. In January of 2008, the Company began
offering a CSO program in the state of Maryland through its online platform.
Because the regulatory environment related to cash advances is increasingly scrutinized by
regulators and legislators, the Company expects that legislation currently pending or that might later be
introduced in some state legislatures could, if enacted, further limit or eliminate the availability of the cash
advance product in some states, despite the significant demand for it. While the Company, along with other
leaders of the cash advance industry, opposes such overly restrictive regulation and legislation, it is possible
that some combination of federal and state regulation and legislation could be enacted that could restrict or
eliminate the availability of cash advance products in some or all of the states in which the Company offers
the cash advance product.
Check Cashing Regulations
The Company offers check cashing services at its Mr. Payroll branded check cashing facilities and
at many of its pawnshops and cash advance locations. Some states require check cashing companies to meet
minimum bonding or capital requirements and to comply with record-keeping requirements. Some states