Cash America 2013 Annual Report Download - page 42

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activity by consumers using online payday loans. The Company does not currently know the nature and extent of the rules
that the CFPB will adopt, and the CFPB’s 2014 agenda indicates that its target date for proposing such rules is March
2014, although it could act earlier or later than that date. See “Recent Developments—Recent Regulatory, Litigation and
Other Developments—Consumer Financial Protection Bureau” for information regarding the Company’s Consent Order
issued by the CFPB on November 20, 2013.
For further discussion of the CFPB and its regulatory, supervisory and enforcement powers, see “Risk Factors—
Risks Related to the Company’s Business and Industry—The Consumer Financial Protection Bureau could have a
significant impact on the Company’s U.S. consumer loan business.”
Pawnshop Regulations
U.S. Regulation
In addition to the U.S. federal regulations described above, the Company’s pawn lending locations are regulated
by the states and local jurisdictions where its pawn lending locations are located and generally must be licensed by the
state. The statutes and regulations applicable to pawn lending locations vary from state to state and in each local
jurisdiction. In general, these statutes and regulations establish licensing requirements for pawnbrokers and pawn
lending locations and regulate various aspects of the pawn loan, such as the service charges and interest rates that a
pawn lending location may charge, the maximum amount of a pawn loan, the minimum and/or maximum term of a
pawn loan, the content and format of the pawn ticket, and the length of time after a loan default that a pawn lending
location must hold defaulted pawned collateral or purchased items before disposing of the merchandise. Failure to
observe a state’s legal requirements for pawnbroking could result in, among other things, a loss of pawn licenses in that
state, the imposition of fines or refunds, and other civil and/or criminal penalties.
Many of the Company’s pawn lending locations are also subject to ordinances in their local jurisdictions that may
require, for example, local licenses or permits and specified recordkeeping procedures, among other things. Most of the
Company’s pawn lending locations voluntarily, or pursuant to applicable laws, work with local law enforcement
agencies and other pawn lenders to determine conflicting claims of rightful ownership. Goods held to secure pawn
loans or goods purchased that are determined to belong to an owner other than the borrower or seller are subject to
recovery by the rightful owner. The Company historically has not experienced a material number of claims of this
nature, and the claims experienced have not had a material adverse effect on the Company’s results of operations.
Each pawn lending location that handles firearms must comply with the Brady Handgun Violence Prevention
Act (the “Brady Act”). The Brady Act requires that federally licensed firearms dealers conduct a background check in
connection with any disposition of handguns. In addition, the Company must comply with the regulations of the U.S.
Department of Justice–Bureau of Alcohol, Tobacco and Firearms that require each pawn lending location dealing in
guns to maintain a permanent written record of all receipts and dispositions of firearms.
Mexico Regulation
The Company’s storefront locations in Mexico are regulated by a federal consumer protection agency,
Procuraduría Federal del Consumidor (“PROFECO”). PROFECO regulates the form and terms of pawn loan contracts
and many operating standards and procedures for pawnshops, including retail operations. All pawnshops operating in
Mexico are required to register themselves and their contracts with PROFECO, as well as report certain customer
activities that PROFECO determines may be associated with stolen goods. Neither PROFECO nor federal statute
imposes interest rate caps on pawn loans. The pawn industry in Mexico is also subject to various regulations in the
areas of tax compliance, customs, consumer protection
and employment matters, among others, by various federal,
state and local governmental agencies. Additionally, certain Mexican states
have pawn statutes that require pawnshops
to be licensed and regulate certain aspects of a pawn operation such as rate, pawn tickets and other terms of the pawn
transaction. Generally, however, federal regulations are intended to control over the state statutes with respect to the
pawn operations in Mexico.