Cash America 2013 Annual Report Download - page 41

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In addition, the Company is subject to regulation by the Federal Trade Commission (“FTC”) in the United States.
The FTC’s Bureau of Consumer Protection’s mandate is to work to protect consumers against unfair, deceptive, or
fraudulent practices in the marketplace. In furtherance of consumer protection, the FTC provides guidance and enforces
federal laws concerning truthful advertising and marketing practices; fair financial practices in lending, loan servicing and
debt collection; and protection of sensitive consumer information.
Under the USA PATRIOT Act the Company must maintain an anti-money laundering compliance program
covering certain of its business activities. The program must include: (1) the development of internal policies, procedures
and controls; (2) designation of a compliance officer; (3) an ongoing employee training program; and (4) an independent
audit function to test the program. In addition, the U.S. Treasury Department’s Office of Foreign Assets Control requires
that the Company have controls in place to prevent acquiring assets from and conducting transactions involving
target countries and specially designated nationals. Under the Bank Secrecy Act and regulations of the U.S. Department
of the Treasury, the Company must report transactions occurring in a single day involving currency in an amount greater
than $10,000. In addition, multiple currency transactions must be treated as single transactions if the Company has
knowledge that the transactions are by, or on behalf of, any person or entity and result in either cash in or cash out
totaling more than $10,000 during any one day. Also, federal regulations require the Company to report suspicious
transactions involving at least $2,000 in a single day to the Financial Crimes Enforcement Network of the Treasury
Department (“FinCEN”). The regulations generally describe three classes of reportable suspicious transactions—one or
more related transactions that the business knows, suspects or has reason to suspect (1) involve funds derived from
illegal activity or are intended to hide or disguise such funds, (2) are designed to evade the requirements of the Bank
Secrecy Act, or (3) appear to serve no legitimate business or lawful purpose. Certain of the Company’s subsidiaries are
registered as money services businesses with the U.S. Treasury Department and must re-register with FinCEN at least
every two years. Such subsidiaries must also maintain a list of names and addresses of, and other information about,
their business and must make that list available to any requesting law enforcement agency. This list must be updated at
least annually. The Company is also subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits
companies and their agents or intermediaries from making improper payments to foreign officials for the purpose of
obtaining or keeping business and/or other benefits.
The Company is also subject to various federal and state laws and regulations relating to privacy and data security.
Under these laws, including the federal Gramm-Leach-Bliley Act, the Company must disclose to its customers the
Company’s privacy policy and practices, including those policies relating to the sharing of customers’ nonpublic personal
information with third parties. This disclosure must be made to customers when the customer relationship is established
and, in some cases, at least annually thereafter. These laws and regulations also require the Company to ensure that its
systems are designed to protect the confidentiality of customers’ nonpublic personal information. These laws and
regulations also dictate certain actions that the Company must take to notify its consumers if their personal information is
disclosed in an unauthorized manner.
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 CFPB, which regulates consumer financial
products and services, including consumer loans offered by the Company. The CFPB has regulatory, supervisory and
enforcement powers over providers of consumer financial products and services, including explicit supervisory authority to
examine and require registration of such providers. On April 24, 2013, the CFPB issued a report entitled “Payday Loans
and Deposit Advance Products: A White Paper of Initial Findings,” indicating that it had “engaged in an in-depth review
of short-term small dollar loans, including payday loans.” The report discusses the initial findings of the CFPB regarding
short-term payday loans provided by non-bank financial institutions at storefront locations and deposit account advances
offered by depository institutions. While the CFPB’s study stated that “these products may work for some consumers for
whom an expense needs to be deferred for a short period of time,” the CFPB also stated that its “findings raised substantial
consumer protection concerns” related to the sustained use of payday loans and deposit account advances. In the report
and subsequent statements, the CFPB reiterated that it has authority to adopt rules identifying acts or practices as unfair,
deceptive or abusive, and hence unlawful, in connection with the offering of consumer financial products and services and
to act to prevent providers from engaging in such acts or practices. The CFPB announced that, based on the potential
consumer harm and the data that it has gathered, further attention was warranted to protect consumers, and that it expects
to use its authorities to provide protections to consumers. The report indicated the CFPB plans to analyze the effectiveness
of limitations, such as cooling-off periods between payday loans, “in curbing sustained use and other harms.”
Additionally, the CFPB indicated that the report did not focus on online lending and that the CFPB is analyzing borrowing