Cash America 2013 Annual Report Download - page 40

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loan industry consist of the sizing and structuring of loans (single or multiple payment) to consumers to meet their loan
requests, speed of funding, customer privacy, ease of access, transparency of fees and interest, and customer service.
Impediments exist that prevent new entrants from easily entering the consumer loan market. New entrants must
successfully implement underwriting and fraud prevention processes, incur high marketing and customer acquisition
costs, overcome consumer brand loyalty and have sufficient capital to withstand early losses associated with unseasoned
loan portfolios. In addition, there are substantial regulatory and compliance costs, including the need for expertise to
customize products associated with licenses to lend in various states in the United States and in many international
jurisdictions.
In addition to consumer loan lenders, the Company also competes with financial institutions, such as banks,
credit unions, other consumer lenders and retail businesses offering similar financial services. Other lenders may and do
lend money on terms more favorable than those offered by the Company. The Company believes that there is also
indirect competition to some of its products and services, including bank overdraft facilities and banks’ and retailers’
insufficient funds policies, many of which may be more expensive alternative approaches for consumers to cover their
bills and expenses than the consumer loan products and services offered by the Company.
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Regulation
The Company’s operations are subject to extensive regulation, supervision and licensing under various federal,
state, local and foreign statutes, ordinances and regulations. (For a geographic breakdown of operation locations see
“Item 2. Properties”). The Company’s failure to comply with applicable laws, rules and regulations could subject it to
regulatory enforcement actions, result in the assessment against it of civil, monetary, criminal or other penalties (some of
which could be significant in the case of knowing or reckless violations), result in the issuance of cease and desist orders
(which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), require
the Company to refund interest or fees, result in a determination that certain loans are not collectible, result in a
revocation of licenses, result in a finding that it has engaged in unfair and deceptive practices or cause damage to the
Company’s reputation, brands and valued customer relationships. The Company could also be subject to changes in
domestic and foreign laws and regulations as discussed under “Item 1A. Risk Factors—Risks Related to the Company’s
Business and Industry—New laws or regulations or adverse changes in, or the interpretation or enforcement of, existing
laws or regulations affecting the Company’s products and services could negatively impact its operations.,” “—
Significant changes in, or a deterioration of, the political, regulatory or economic environment of Mexico, Australia,
Canada or the United Kingdom could affect the Company’s operations in these countries,” “—The United Kingdom
has recently increased regulation of the consumer loan industry as well as demonstrated an increasing interest in
considering legislation or regulations that could further regulate or restrict the consumer loan products the Company
offers” and “The OFT is reviewing the payday lending sector in the United Kingdom, including the Company, which
could result in changes to the Company’s business processes or payday lending products.”
U.S. Federal Regulation
Certain U.S. federal regulations are applicable to the Company’s business, as described below.
The federal Truth in Lending Act (“TILA”), and its underlying regulations, known as Regulation Z, require the
Company to provide certain disclosures to prospective borrowers and protect against unfair credit practices. The
principal disclosures required under TILA are intended to promote the informed use of consumer credit. Under TILA,
when acting as a lender, the Company is required to disclose certain material terms related to a credit transaction,
including, but not limited to, the annual percentage rate, finance charge, amount financed, total of payments, the number
and amount of payments and payment due dates to repay the indebtedness.
The Company is also subject to the federal Fair and Accurate Credit Transactions Act, which limits the sharing
of information with affiliates for marketing purposes and requires the Company to adopt written guidance and
procedures for detecting, preventing and responding appropriately to mitigate identity theft and to adopt various
coworker policies and procedures and provide coworker training and materials that address the importance of protecting
non-public personal information and aid the Company in detecting and responding to suspicious activity, including
suspicious activity that may suggest a possible identity theft red flag, as appropriate.