Cash America 2011 Annual Report Download - page 46

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Each pawn lending location that handles firearms must comply with the Brady Handgun Violence Prevention
Act (the “Brady Act”). The Brady Act requires that federally licensed firearms dealers conduct a background check in
connection with any disposition of handguns. In addition, the Company must comply with the regulations of the U.S.
Department of Justice–Bureau of Alcohol, Tobacco and Firearms that require each pawn lending location dealing in
guns to maintain a permanent written record of all receipts and dispositions of firearms.
Mexico Regulation
The Prenda Fácil storefront locations are regulated by a federal consumer protection agency, Procuraduría
Federal del Consumidor (“PROFECO”). PROFECO regulates the form and terms of pawn loan contracts and many
operating standards and procedures for pawnshops, including retail operations. Neither PROFECO nor federal statute
imposes interest rate caps on pawn loans. The pawn industry in Mexico is also subject to various regulations in the areas
of tax compliance, customs, consumer protection and employment matters, among others, by various federal, state and
local governmental agencies. Additionally, certain Mexican states have pawn statutes that require pawnshops to be
licensed and regulate certain aspects of a pawn operation such as rate, pawn tickets and other terms of the pawn
transaction. Generally, however, federal regulations are intended to control over the state statutes with respect to the
pawn operations in Mexico.
Consumer Loan Regulations
U.S. Regulation
Each state in the United States in which the Company originates consumer loan products has specific laws
dealing with the conduct of this business. The same regulations generally apply to consumer loans made both in
storefront locations and online. These laws and regulations typically restrict the amount of finance and service charges
that may be assessed, including setting the maximum fees or interest rates that the Company can charge, and limit the
customer’s ability to renew or extend these consumer loans. In many instances, the regulations also limit the aggregate
principal amount that a provider may advance (and, in some cases, the number of consumer loans the provider may
make) to any one customer at one time. Some state statutes also specify minimum and maximum maturity dates for
consumer loans and, in some cases, specify mandatory cooling-off periods between transactions. Consumer loan lenders
typically must be licensed by the state licensing authority in order to offer the consumer loan product in that state and
must file periodic written reports regarding business operations and undergo comprehensive examinations or audits from
time to time to assess its compliance with applicable laws and regulations. Some states require consumer loan lenders to
report their customers’ consumer loan activities to a state-wide database, and such lenders are generally restricted from
making consumer loans to customers who may have a certain amount of consumer loans outstanding with other lenders.
Failure to observe a state’s legal requirements for consumer loan lending could result in, among other things, a loss of
consumer loan licenses in that state, the imposition of fines or customer refunds, and other civil and/or criminal
penalties.
In states or jurisdictions where the Company offers its CSO programs, it complies with that jurisdiction’s Credit
Services Organization Act or a similar statute that generally defines the services that the Company can provide to
consumers and requires the Company to provide a contract to the customer outlining its services and the cost of those
services to the customer. In addition, these laws may require additional disclosures to consumers and may require the
Company to be registered or licensed with the jurisdiction and/or be bonded.
The consumer loan 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 uses the Federal Fair Debt Collection Practices Act (“FDCPA”) as a guide to operating its collection activities
and complies with all applicable state collection practices laws. Furthermore, with respect to online consumer loans, the
Company is subject to various state and federal e-signature rules mandating that certain disclosures be made and certain