Cash America 2012 Annual Report Download - page 49

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Risks Related to the Company’s Business and Industry
Adverse changes in laws or regulations affecting the Company’s products and services could negatively impact the
Company’s operations.
The Company’s products and services are subject to extensive regulation and supervision under various federal,
state, local and foreign laws, ordinances and regulations. In addition, as the Company develops new products and
services, it will become subject to additional federal, state, local and foreign laws, ordinances and regulations. Failure to
comply with applicable laws and regulations could subject the Company to regulatory enforcement action and/or could
result in the assessment against the Company of civil, monetary or other penalties, could require the Company to refund
interest or fees or could result in a determination that certain loans are not collectible. The Company faces the risk that
restrictions or limitations resulting from the enactment, change, or interpretation of laws and regulations could
negatively affect the Company’s business activities or effectively eliminate some of the Company’s current loan
products.
In particular, consumer loans have come under increased regulatory scrutiny in the United States in recent years
that has resulted in increasingly restrictive regulations and legislation that makes offering such loans in certain states less
profitable or unattractive to the Company. Regulations adopted by some states require that all borrowers of certain short-
term loan products be listed on a database and limit the number of loans a borrower may have outstanding. Other
regulations adversely impact the availability of some of the Company’s consumer loan products to active duty military
personnel, active members of the National Guard or members on active reserve duty and their immediate dependents.
Legislative or regulatory activities may also limit the amount of interest and fees to levels that do not permit the offering
of consumer loans to be feasible or may limit the number of consumer loans that customers may receive or have
outstanding.
Certain consumer advocacy groups and federal and state legislators have also asserted that laws and regulations
should be tightened so as to severely limit, if not eliminate, the availability of certain consumer loan products to
consumers, despite the significant demand for it. In particular, both the executive and legislative branches of the U.S.
federal government continue to receive significant pressure from consumer advocates and other industry opposition
groups, and those governmental branches have recently exhibited an increased interest in debating legislation that could
further regulate consumer loan products. The U.S. Congress has debated, and may in the future adopt, proposed
legislation that could, among other things, place a cap on the effective annual percentage rate on consumer loan
transactions (which could encompass both the Company’s consumer loan and pawn businesses), place a cap on the
dollar amount of fees that may be charged for consumer loans, ban or limit loan renewals or extensions (where the
customer agrees to pay the current finance charge on a loan for the right to make payment of the outstanding principal
balance of such loan at a later date plus an additional finance charge), including the rates to be charged for loan renewals
or extensions, require the Company to offer an extended payment plan, allow for only minimal origination fees for
advances, require short-term lenders to be bonded or require lenders to report consumer loan activity to databases
designed to monitor or restrict consumer borrowing activity.
The Company follows legislative and regulatory developments in each state where it does business. In addition,
since 2007, legislative changes that have been enacted in Arizona, Colorado, Delaware, Illinois, Maryland, Minnesota,
Montana, New Hampshire, Ohio, Oregon, Washington and Wisconsin impact some of 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 its Credit Services
Organization program in Maryland. In addition, these changes have also altered the parameters upon which the
Company offers some of its consumer loans to consumers in the other states mentioned above, which has generally had
the effect of 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 and Other Developments” for additional
information regarding recent regulatory developments.