Cash America 2012 Annual Report Download - page 41

16
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 defaulted pawned collateral or purchased items before disposing of
the merchandise. 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.
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 Cash America casa de empeño 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. Certain amendments to
Mexican federal consumer protection laws will take effect in July 2013. PROFECO will be charged with enforcing
compliance with the amendments. The amendments will, among other things, require all pawnshops to register
themselves and their contracts with PROFECO and report certain customer activities that PROFECO determines may be
associated with stolen goods. 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.