Cash America 2012 Annual Report Download - page 42

17
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. As applicable or required, the Company maintains active licenses in each of the states or jurisdictions in which
it operates.
In states or jurisdictions (including certain municipalities in Texas), where the Company offers its CSO
programs, it complies with that jurisdiction’s Credit Services Organization Act or a similar statute or ordinance 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, including the
Electronic Funds Transfer Act. Additionally, the Company uses the Federal Fair Debt Collection Practices Act
(“FDCPA”) as a guide to operating its collection activities and complies with 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 steps be followed in order to obtain and authenticate e-signatures.
In addition, some states restrict the advertising content of marketing materials with respect to consumer loans.
Additional federal regulations governing consumer lending businesses are described in “Other Regulations
Affecting Lending Operations” below.
Consumer loans have come under increased regulatory scrutiny in recent years that has resulted in increasingly
restrictive regulations and legislation that has been introduced or adopted in a number of states, which has eliminated the
offering of consumer loans in certain states or has made offering such loans less profitable or unattractive to the
Company.
Foreign Regulation
In the United Kingdom, the Company’s consumer lending activities must comply with the European Union
Consumer Credit Directive, the CCA and with related rules and regulations, which, among other things, require the
Company to obtain governmental licenses and prescribe the presentation, form and content of loan agreements,
including statutory warnings and the layout of financial information. The Company must also follow the Irresponsible