Cash America 2012 Annual Report Download - page 60

35
Judicial decisions, CFPB rule-making or amendments to the Federal Arbitration Act could render the arbitration
agreements the Company uses illegal or unenforceable.
The Company includes arbitration provisions in its consumer loan agreements. These provisions are designed to
allow the Company to resolve any customer disputes through individual arbitration rather than in court and explicitly
provide that all arbitrations will be conducted on an individual and not on a class basis. The Company’s arbitration
agreements do not generally have any impact on regulatory enforcement proceedings.
The Company takes the position that the arbitration provisions in its consumer loan agreements are valid and
enforceable; however, the enforceability of arbitration provisions is often challenged in court. If those challenges are
successful, the Company’s arbitration and class action waiver provisions could be unenforceable, which could subject
the Company to additional litigation, including additional class action litigation.
In addition, the U.S. Congress has considered legislation that would generally limit or prohibit mandatory
arbitration agreements in consumer contracts and has enacted legislation with such a prohibition with respect to certain
mortgage loan agreements and also certain consumer loan agreements to members of the military on active duty and
their dependents. Further, the Dodd-Frank Act directs the CFPB to study consumer arbitration and report to the U.S.
Congress, and it authorizes the CFPB to adopt rules limiting or prohibiting consumer arbitration, consistent with the
results of its study. Any such rule would apply to arbitration agreements entered into more than six months after the final
rule becomes effective (and not to prior arbitration agreements).
Any judicial decisions, legislation or other rules or regulations that impair the Company’s ability to enter into
and enforce consumer arbitration agreements and class action waivers could significantly increase the Company’s
exposure to class action litigation as well as litigation in plaintiff-friendly jurisdictions. Such litigation would be costly
and could have a material adverse effect on the Company’s business, results of operations and financial condition.
The Company’s operations could be subject to natural disasters and other business disruptions, which could
adversely impact its future revenue and financial condition and increase its costs and expenses.
The Company’s services, operations and pawnshops from which it provides its products and services are
vulnerable to damage or interruption from tornadoes, hurricanes, earthquakes, fires, floods, power losses,
telecommunications failures, terrorist attacks, acts of war, human errors and similar events. A significant natural
disaster, such as a tornado, hurricane, earthquake, fire or flood, could have a material adverse impact on the Company’s
business and the Company’s insurance coverage may be insufficient to compensate the Company for losses that may
occur. Acts of terrorism, civil unrest or violence could cause disruptions to the Company’s business or the economy as a
whole. More generally, any of these events could cause consumer confidence and spending to decrease or result in
increased volatility in the U.S. economy and worldwide financial markets. Any of these occurrences could have a
material adverse effect on the Company’s business, prospects, results of operations and financial condition.
The Company may incur property, casualty or other losses not covered by insurance.
The Company maintains a program of insurance coverage for various types of property, casualty and other risks.
The types and amounts of insurance that the Company obtains vary from time to time, depending on availability, cost
and management’s decisions with respect to risk retention. The policies are subject to deductibles and exclusions that
result in the Company’s retention of a level of risk on a self-insurance basis. Losses not covered by insurance could be
substantial and may increase the Company’s expenses, which could harm the Company’s results of operations and
financial condition.