Cash America 2011 Annual Report Download - page 55

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Significant changes in, or a deterioration of, the political, regulatory or economic environment of Mexico, Australia,
Canada or the United Kingdom could affect the Company’s operations in these countries.
Significant changes in, or a deterioration of, the political, regulatory or economic environment of Mexico, Australia,
Canada or the United Kingdom could restrict the ability of the Company to sustain or expand its operations in these
countries, which could materially adversely affect the Company’s business, prospects, results of operations and financial
condition and could impair the Company’s ability to continue its operations in these countries.
In Mexico, restrictions and regulations affecting pawn services, including licensing restrictions, disclosure
requirements and limits on interest rates have been and likely will in the future be proposed from time to time. The
Company also maintains business relationships with significant third party service providers. The failure of key service
providers to fulfill their obligations as a result of regulatory, political, economic or other factors could disrupt the
Company’s operations in Mexico. The Company’s business in Mexico is also subject to other potential risks and
uncertainties that are beyond the Company’s control, such as violence, social unrest, enforcement of property rights and
public safety and security, which could restrict or eliminate the Company’s ability to operate some or all of its locations
in Mexico or significantly reduce customer traffic or demand.
In addition, the Company offers consumer loans, either directly or through an independent third-party lender,
over the Internet to customers in Australia, Canada and the United Kingdom. These countries have recently exhibited an
increasing interest in considering legislation that could regulate or restrict the short-term consumer loan products the
Company offers. For example, in the United Kingdom the Company must follow the Irresponsible Lending Guidance of
the Office of Fair Trading (the “OFT”), and in October 2011, the OFT issued new debt collection guidance, updating
prior guidance, that could restrict the number of times and the amounts that short-term consumer lenders such as the
Company are allowed to debit a customer’s account, which includes debits to both bank accounts and debit cards. The
OFT is undertaking a supplemental consultation on the guidance it issued that may result in an amendment to the
guidance, and the OFT has indicated that it will not enforce the guidance during the supplementary consultation period.
While the Company is in the early stages of interpreting the guidance and assessing its impact on its business and current
practices, compliance with the new guidance, as it is written or as it may be amended, could result in significant changes
to the Company’s consumer loan operations with respect to loans made in the United Kingdom and collection practices
and could result in lower collections on loans made by the Company and a decrease in the number of customers that it is
able to approve. In addition, in February 2012, the OFT announced that it had launched an extensive review of the
payday lending sector in the United Kingdom to assess the sector's compliance with the Consumer Credit Act of 2006,
the OFT's Irresponsible Lending Guidelines and other relevant guidance and legal obligations. In connection with this
review, the Company has received formal notice from the OFT indicating that the Company is one of 50 companies that
will be subject to on-site inspections by the OFT. However, the OFT has not yet established when it plans to visit the
Company's premises to assess the Company's United Kingdom business and compliance activities. The OFT has
announced that these inspections could be used to assess a licensee's fitness to hold a consumer credit license and could
result in formal enforcement action where appropriate. If the Company is required to make changes to its consumer loan
operations in the United Kingdom due to the new OFT guidance or if any action is taken by the OFT following its
inspection of the Company and others in the industry, such action could have a material adverse effect on the Company's
foreign business, prospects, results of operations and financial conditions and could impair the Company's ability to
continue its current operations in the United Kingdom.
The Company’s earnings and financial position are subject to changes in the value of gold. A significant or sudden
decline in the price of gold could materially affect the Company’s earnings.
A significant portion of the Company’s pawn loans are secured by gold jewelry. The Company’s pawn service
charges, sales proceeds and ability to dispose of excess jewelry inventory at an acceptable margin depend on the value of
gold. A significant decline in gold prices could result in decreases in merchandise sales margins, in inventory
valuations, in the value of collateral securing outstanding pawn loans, and in the balance of pawn loans secured by gold