Cash America 2013 Annual Report Download - page 43

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Consumer Loan Regulations
U.S. Federal Regulation
In addition to the U.S. federal regulations described above, the Company’s consumer loan business is subject to the
Fair Credit Reporting Act (“FCRA”) and the Equal Credit Opportunity Act (“ECOA”). These laws require the Company to
provide certain disclosures to prospective borrowers and protect against unfair credit practices. The use of consumer reports
and other personal data used in credit underwriting is governed by the FCRA and similar state laws governing the use of
consumer credit information. The FCRA also requires the Company to promptly update any credit information reported to
a credit reporting agency about a consumer and to allow a process by which consumers may inquire about credit
information furnished by the Company to a consumer reporting agency. In addition, the FCRA requires the Company to
provide a Notice of Adverse Action to a loan applicant when the Company denies an application for credit, which, among
other things, informs the applicant of the action taken regarding the credit application and of their right to learn the specific
reasons for the denial of credit. The ECOA prohibits the Company from discriminating against any credit applicant on the
basis of any protected category, such as race, color, religion, national origin, sex, marital status or age, and requires the
Company to notify credit applicants of any action taken on the individual’s credit application.
Some of the Company’s services may include the assembly and delivery of consumer reports, or similar reports, to
affiliated and potentially other third-parties. As a distributor of consumer reports and similar data, if the Company
becomes a Consumer Reporting Agency (“CRA”), as defined by the FCRA, the Company would be required to comply
with certain aspects of these laws and regulations that apply to CRAs. Non-compliance with the FCRA, either as a user
or as a CRA, could lead to statutory penalties, private litigation for damages or, in certain cases, regulatory investigation
and sanctions, including obligations under government initiated consent decrees.
Federal law also limits the annual percentage rate to 36% on certain consumer loans made to members of the U.S.
military, active-duty reservists and members of the National Guard and their immediate families. This 36% annual
percentage rate cap applies to a variety of consumer loan products, including short-term consumer loans. Therefore, due
to these rate restrictions, the Company is unable to offer certain short-term consumer loans to active duty military
personnel, active members of the National Guard or members on active duty and their immediate dependents.
The consumer loan business is also subject to the federal Electronic Funds Transfer Act and various other laws,
rules and guidelines relating to the procedures and disclosures required in debiting or crediting a bank account relating to
a consumer loan (i.e., ACH funds transfer). Additionally, in conjunction with the Company’s CSO programs, the
Company is required to comply with the federal Fair Debt Collection Practices Act (“FDCPA”), and the Company also
otherwise uses the FDCPA as a guide in connection with operating its collection activities. The Company is also
required to comply with all applicable state collection practices laws. Furthermore, the Company is subject to various
state and federal e-signature rules mandating that certain disclosures be made and certain steps be followed in order to
obtain and authenticate e-signatures.
U.S. State Regulation
The Company’s consumer loan business is regulated under a variety of enabling state statutes, all of which are
subject to change and which may impose significant costs or limitations on the way the Company conducts or expands its
business. As of December 31, 2013, the Company operated in 32 states that have specific statutes and regulations that
enable the Company to offer economically viable products. The Company does not conduct business in the remaining
states or in the District of Columbia because it does not believe it is economically feasible to operate in those jurisdictions
due to specific statutory or regulatory restrictions, such as interest rate ceilings or caps on the fees that may be charged.
However, the Company may later offer its products or services in any of these states or the District of Columbia if the
Company believes doing so may become economically viable because of changes in applicable statutes or regulations or if
the Company determines it can broaden its product offerings to operate under existing laws and regulations. Despite the
lack of specific laws, other laws may permit the Company to offer products and services in these states.
The scope of state regulation, including the fees and terms of the Company’s products and services, varies from
state to state. The terms of the Company’s products and services vary from state to state in order to comply with the laws
and regulations of the states in which it operates.