Cash America 2009 Annual Report Download - page 46

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In particular, short-term consumer loans have come under increased regulatory scrutiny in the United
States in recent years that has resulted in increasingly restrictive regulations and legislation that makes
offering such loans less profitable or unattractive to the Company. Regulations adopted by some states
require that all borrowers of certain short-term loan products be listed on a database and limit the number of
such loans a borrower may have outstanding. Other regulations adversely impact the availability of the
Company’s cash advance products to active duty military personnel. Legislative or regulatory activities may
also limit the amount of interest and fees to levels that do not permit the offering of cash advance loans to be
feasible or may limit the number of short-term loans that customers may receive or have outstanding.
Certain consumer advocacy groups and federal and state legislators have also asserted that laws and
regulations should be tightened so as to severely limit, if not eliminate, the availability of certain cash advance
products to consumers, despite the significant demand for it. In particular, both the executive and legislative
branches of the federal government have recently exhibited an increasing interest in debating legislation that
could further regulate short-term consumer loan products. Various cash advance bills have been proposed or
introduced in the U.S. Congress that could, among other things, place a cap on the effective annual percentage
rate (“APR”) on consumer loan transactions (which could encompass both the Company’s cash advance and
pawn businesses), place a cap on the dollar amount of fees that may be charged for cash advances, ban
rollovers (payment of a fee to extend the term of a cash advance or other short-term financing), require the
Company to offer an extended payment plan, allow for minimal origination fees for advances originated over
the Internet, limit refinancings and the rates to be charged for refinancings and require cash advance lenders
to be bonded. Federal bills to establish a consumer financial protection agency with broad regulatory powers
over consumer credit products have also been introduced.
The Company is currently following legislative and regulatory developments in individual states
where it does business. In particular, the Company is closely monitoring legislative and regulatory
developments in Arizona, Ohio, Pennsylvania, Maryland and Wisconsin. See “Item 1. Business—
Regulation—Recent Regulatory Developments” for additional information regarding recent developments in
some of these states.
The Company cannot currently assess the likelihood of any future unfavorable federal or state
legislation or regulations being proposed or enacted. Also, there can be no assurance that additional
legislative or regulatory initiatives will not be enacted which would severely restrict, prohibit or eliminate the
Company’s ability to offer a cash advance product. Any federal or state legislative or regulatory action that
severely restricts, by imposing a national APR limit on consumer loan transactions or otherwise, or prohibits
cash advance and similar services, if enacted, could have a material adverse impact on the Company’s
business, prospects, results of operations and financial condition and could impair the Company’s ability to
continue current operations.
In addition to state and federal laws and regulations, the Company’s business is subject to various
local rules and regulations such as local zoning regulation and permit licensing. Local jurisdictions’ efforts to
restrict pawnshop operations and cash advance lending through the use of local zoning and permitting laws
have been on the increase. Actions taken in the future by local governing bodies to require special use permits
for, or impose other restrictions on pawn lending locations or cash advance lenders could have a material
adverse effect on the Company’s business, results of operations and financial condition.
Media reports and public perception of short-term consumer loans as being predatory or abusive could
materially adversely affect the Company’s cash advance business.
In recent years, consumer advocacy groups and some media reports have advocated governmental
action to prohibit or place severe restrictions on short-term consumer loans. The consumer advocacy groups
and media reports generally focus on the cost to a consumer for this type of loan, which is alleged to be higher
than the interest typically charged by banks to consumers with better credit histories. The consumer advocacy
groups and media reports do not discuss the lack of viable alternatives for our customers’ borrowing needs or