Cash America 2011 Annual Report Download - page 54

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ask questions about its business, and the examination procedures include specific modules for examining marketing
activities, loan application and origination activities, payment processing activities and sustained use by consumers,
collections, defaults and consumer reporting and third-party relationships. Although the CFPB does not have the
authority to regulate fees or interest rates, it is possible that at some time in the future the CFPB could propose and adopt
rules making short-term consumer lending products and services materially less profitable or even impractical to offer,
which could force the Company to modify or terminate certain of its product offerings in the United States. The CFPB
could also adopt rules imposing new and potentially burdensome requirements and limitations with respect to other
consumer loan products and services. Any such rules could have a material adverse effect on the Company’s business,
results of operations and financial condition or could make the continuance of all or part of the Company’s current U.S.
business impractical or unprofitable.
In addition to the Dodd-Frank Act’s grant of regulatory and supervisory powers to the CFPB, the Dodd-Frank
Act gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer
financial laws (including the CFPB’s own rules). In these proceedings, the CFPB can obtain cease and desist orders
(which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and
monetary penalties ranging from $5,000 per day for ordinary violations of federal consumer financial laws to $25,000
per day for reckless violations and $1 million per day for knowing violations. Also, where a company has violated Title
X of the Dodd-Frank Act or CFPB regulations implemented under Title X of the Dodd-Frank Act, the Dodd-Frank Act
empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders
available to the CFPB. If the CFPB or one or more state officials believe that the Company has violated any of the
applicable laws or regulations, they could exercise their enforcement powers in ways that could have a material adverse
effect on the Company or its business.
Media reports and public perception of consumer loans as being predatory or abusive could materially adversely
affect the Company’s consumer loan 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. Such consumer advocacy groups and media reports
generally focus on the Annual Percentage Rate, to a consumer for this type of loan, which is compared unfavorably to
the interest typically charged by banks to consumers with top-tier credit histories. The fees charged by the Company and
others in the industry attract media publicity about the industry and can be perceived as controversial by those who do
not focus on the credit risk and high transaction costs of serving the Company’s customer segment. If the negative
characterization of these types of loans becomes increasingly accepted by consumers, demand for the consumer loan
products could significantly decrease, which could materially affect the Company’s results of operations and financial
condition. Additionally, if the negative characterization of these types of loans is accepted by legislators and regulators,
the Company could become subject to more restrictive laws and regulations that could materially adversely affect the
Company’s financial condition and results of operations and could impair the Company’s ability to continue current
operations.
There are risks associated with the Company’s previously-announced proposed initial public offering of Enova
International, Inc.
On September 15, 2011, the Company announced that its board of directors had unanimously approved a plan to
divest a majority ownership of its wholly-owned subsidiary, Enova International, Inc. (“Enova”), that comprises its e-
commerce segment via an initial public offering (an “IPO”), and Enova has filed a registration statement on Form S-1 to
register shares of common stock to be sold by Enova and the Company. The completion of the IPO is subject to
numerous conditions, including market conditions. The Company may not complete the IPO, in which event it will have
incurred significant expenses that it will be unable to recover, and for which it will not receive any benefit. If the IPO is
completed, Enova would be a new publicly-traded company. The Company is unable to predict what the market price of
its common stock would be after the IPO. The Company cannot make any assurances that the IPO, if completed, will
produce any increase for its shareholders in the market value of their holdings in the Company. In addition, the market
price of the Company’s common stock could be volatile for several months after the IPO and may continue to be more
volatile than the Company’s common stock would have been if the IPO had not occurred.