Cash America 2011 Annual Report Download - page 45

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result, the Company’s principal competitors are not online lenders but storefront lenders, such as Money Mart and The
Cash Store.
Management believes that competition for the online lending channel continues to be fragmented and is
primarily from competitors who may be operating either off-shore or within the boundaries of Native American
reservations as a sovereign nation and do not operate under state or federal regulatory agencies. Management believes
that the principal competitive factors in the consumer loan industry consist of the ability to provide sufficient loan size to
consumers to meet their loan requests, speed of funding, customer privacy, ease of access, transparency of fees and
interest, and customer service.
Impediments exist that prevent new entrants from easily entering the online lending market. New entrants must
successfully implement underwriting and fraud prevention processes, incur high marketing and customer acquisition
costs, overcome consumer brand loyalty and have sufficient capital to withstand early losses associated with unseasoned
loan portfolios. In addition, there are substantial regulatory and compliance costs, including the need for expertise to
customize products associated with licenses to lend in various states in the United States and in many international
jurisdictions.
In addition to consumer loan lenders, the Company also competes with financial institutions, such as banks,
credit unions, other consumer lenders and retail businesses offering similar financial services. Other lenders may and do
lend money on terms more favorable than those offered by the Company. The Company believes that there is also
indirect competition to some of its products and services, including bank overdraft facilities and banks’ and retailers’
insufficient funds policies, many of which may be more expensive alternative approaches for consumers to cover their
bills and expenses than the consumer loan products and services offered by the Company.
Regulation
The Company’s operations are subject to extensive regulation, supervision and licensing under various federal,
state and local statutes, ordinances and regulations. (For a geographic breakdown of operating locations, see “Item 2.
Properties.”)
Pawnshop Regulations
U.S. Regulation
The Company’s pawn lending locations are regulated by the states and local jurisdictions in which they are
located, and generally must be licensed by the state. The statutes and regulations applicable to pawn lending locations
vary from state to state and in each local jurisdiction. In general, these statutes and regulations establish licensing
requirements for pawnbrokers and pawn lending locations and regulate various aspects of the pawn loan, such as the
service charges and interest rates that a pawn lending location may charge, the maximum amount of a pawn loan, the
minimum and/or maximum term of a pawn loan, the content and format of the pawn ticket, and the length of time after a
loan default that a pawn lending location must hold a pawned item before disposing of it. Failure to observe a state’s
legal requirements for pawnbroking could result in, among other things, a loss of pawn licenses in that state, the
imposition of fines or refunds, and other civil and/or criminal penalties. Additional federal regulations governing pawn
operations are described in “Other Regulations Affecting Lending Operations” below.
Many of the Company’s pawn lending locations are also subject to ordinances in their local jurisdictions that
may require, for example, local licenses or permits and specified recordkeeping procedures, among other things. Most of
the Company’s pawn lending locations voluntarily, or pursuant to applicable laws, work with local law enforcement
agencies and other pawn lenders to determine conflicting claims of rightful ownership. Goods held to secure pawn loans
or goods purchased that are determined to belong to an owner other than the borrower or seller are subject to recovery
by the rightful owner. The Company historically has not experienced a material number of claims of this nature, and the
claims experienced have not had a material adverse effect on the Company’s results of operations.