Cash America 2011 Annual Report Download - page 53

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The Company follows legislative and regulatory developments in each state where it does business. In addition,
since 2006, legislative changes that have been enacted in Arizona, Colorado, Illinois, Maryland, Minnesota, Montana,
New Hampshire, Ohio, Oregon, Washington and Wisconsin impact the consumer loan products the Company has
historically offered in those states. Due to these legislative changes, the Company has ceased offering consumer loans in
the States of Arizona, Montana and New Hampshire and discontinued the Credit Services Organization program in
Maryland. In addition, these changes have also altered the parameters upon which the Company offers consumer loans
to consumers in the other states mentioned above; therefore, reducing the profitability and the volume of the consumer
loans the Company offers to customers in these other states. See “Item 1. Business—Recent Developments—Recent
Regulatory Developments” for additional information regarding recent regulatory developments.
The Company cannot currently assess the likelihood of any future unfavorable federal or state legislation or
regulations being proposed or enacted that could affect the Company’s products and services, including short-term
consumer loans and pawn loans. The Company is closely monitoring proposed legislation being discussed in states such
as Kentucky, Mississippi, Missouri and Ohio, among others. There can be no assurance that additional legislative or
regulatory initiatives will not be enacted that could severely restrict, prohibit or eliminate the Company’s ability to offer
a short-term loan product. Any federal or state legislative or regulatory action that severely restricts, by imposing an
annual percentage rate limit on consumer loan transactions or otherwise prohibits, or places restrictions on, consumer
loans 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 short-term lending through the use of local zoning and permitting laws have been increasing. Actions
taken in the future by local governing bodies to require special use permits for, or impose other restrictions on consumer
lending or short-term lenders could have a material adverse effect on the Company’s business, prospects, results of
operations and financial condition and could impair the Company’s ability to continue current operations.
The Consumer Financial Protection Bureau that was created by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 has announced the commencement of regulatory, supervisory and enforcement powers over
non-bank providers of consumer credit such as the Company.
The U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
“Dodd-Frank Act”), and Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau (the
“CFPB”). The CFPB became operational in certain respects in July 2011, although it did not have the ability to oversee
and exercise its full authority over non-depository institutions and implement related rules until a permanent director
was installed. On January 4, 2012, President Obama appointed a Director of the CFPB in a recess appointment
bypassing Senate confirmation. Although there remain doubts about the legality of this appointment and the
appointment may be subject to legal challenge, the CFPB has announced that it will now exercise full regulatory,
supervisory and enforcement powers over certain non-bank providers of consumer financial products and services such
as the Company.
The CFPB’s powers include explicit supervisory authority to examine and require registration of such providers
of consumer financial products and services, including providers of consumer loans such as the Company; the authority
to adopt rules describing specified acts and practices as being “unfair,” “deceptive” or “abusive,” and hence unlawful;
and the authority to impose recordkeeping obligations. The Company does not currently know the nature and extent of
the rules the CFPB will consider for consumer loan products and services such as those offered by the Company or the
timeframe in which the CFPB may consider such rules.
The CFPB has indicated that it intends to systematically gather data to obtain a complete picture of the
consumer loan market and its impact on consumers, and the CFPB has also released its Short-Term, Small-Dollar
Lending Procedures, which is the field guide CFPB examiners will use when examining small-dollar lenders such as the
Company. The CFPB’s examination authority permits CFPB examiners to inspect the Company’s books and records and