Cash America 2012 Annual Report Download - page 50

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The Company cannot currently assess the likelihood of any future unfavorable federal or state legislation or
regulations being proposed or enacted that could affect the Company’s products and services, including consumer loans
and pawn loans. The Company is closely monitoring proposed legislation being discussed in states such as Kansas,
Kentucky, Mississippi, Missouri, Ohio and Texas, among others. There can be no assurance that additional legislative or
regulatory initiatives will not be enacted that could severely restrict, prohibit or eliminate the Company’s ability to offer
a consumer loan product. Any federal or state legislative or regulatory action that severely restricts, by imposing an
annual percentage rate limit on consumer loan transactions or otherwise prohibits, or places restrictions on, consumer
loans and similar services, if enacted, could have a material adverse impact on the Company’s business, prospects,
results of operations and financial condition and could impair the Company’s ability to continue current operations.
In addition to state and federal laws and regulations, the Company’s business is subject to various local rules
and regulations such as local zoning regulation and permit licensing. Local jurisdictions’ efforts to restrict pawnshop
operations and short-term lending through the use of local zoning and permitting laws have been increasing. Actions
taken in the future by local governing bodies to require special use permits for, or impose other restrictions on consumer
lending or short-term lenders could have a material adverse effect on the Company’s business, prospects, results of
operations and financial condition and could impair the Company’s ability to continue current operations.
As described further below, the Company is also subject to foreign laws in the countries in which it operates or
offers loan products.
The Consumer Financial Protection Bureau could have a significant impact on the Company’s U.S. consumer loan
business.
In July 2010, the U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (the “Dodd-Frank Act”), and Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau
(the “CFPB”), which regulates consumer financial products and services, including consumer loans offered by the
Company. On January 4, 2012, President Obama appointed a Director of the CFPB in a recess appointment bypassing
Senate confirmation. Although there remain doubts about the legality of this appointment and the appointment is subject
to legal challenge, the CFPB has begun exercising supervisory review over certain non-bank providers of consumer
financial products and services, including providers of consumer loans such as the Company. The Dodd-Frank Act gave
the CFPB, among other things, authority to examine and require registration of providers of consumer financial products
and services, including providers of consumer loans such as the Company; the authority to adopt rules describing
specified acts and practices as being “unfair,” “deceptive” or “abusive,” and hence unlawful; and the authority to impose
record-keeping obligations. The Company does not currently know the nature and extent of the rules that the CFPB will
consider with respect to consumer loan products and services such as those offered by the Company or the timeframe in
which the CFPB may consider such rules.
The CFPB has indicated that it intends to systematically gather data to obtain a complete picture of the
consumer loan market and its impact on consumers, and the CFPB has also released its Short-Term, Small-Dollar
Lending Examination Procedures, which is the field guide for CFPB examiners to use when examining small-dollar
lenders such as the Company. The CFPB’s examination authority permits CFPB examiners to inspect the Company’s
books and records and 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, accounts in default, consumer reporting and third-party relationships, as well as the
Company’s compliance program. Although the CFPB does not have the authority to regulate interest rates, it is possible
that at some time in the future the CFPB could propose and adopt new rules that require certain changes to short-term
consumer lending products and services, including certain short-term loans offered by or through the Company, which
could make these products and services materially less profitable or even impractical to offer and 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 new rules adopted by the CFPB could also result in significant compliance costs to the Company. Any