Cash America 2013 Annual Report Download - page 49

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profitable or unattractive to the Company. This scrutiny has resulted in the Company changing some of the consumer
loan products offered in those states and has reduced the profitability or volume of consumer loans in some of those
states. It has also, in some cases, resulted in the Company ceasing to offer consumer loans in certain states, including,
since 2011, the States of Arizona, Montana and New Hampshire, and discontinuation of its CSO program in Maryland.
Regulations adopted by some states in the United States require that all borrowers of certain short-term loan products be
reported to a centralized database and limit the number of loans a borrower may have outstanding. Other laws adversely
impact the availability of some of the Company’s consumer loan products in the United States to active duty military
personnel, active members of the National Guard or members on active reserve duty and their immediate dependents. In
addition, the Company’s business is subject to various local rules and regulations such as local zoning regulation and
permit licensing. Local jurisdictions’ efforts to restrict pawnshop operations and short-term lending through the use of
local zoning and permitting laws have been increasing and could reduce profitability and volume of the loans offered or
impair the Company’s ability to continue current operations in those jurisdictions. For example, during 2013, the
Company closed 36 retail services locations in Texas that offered consumer loans as their primary source of revenue,
primarily as a result of restrictive city ordinances that have been passed since 2011 that had the effect of reducing the
profitability and the volume of short-term consumer loans. See “Item 1. Business—Recent Developments” for additional
information regarding recent regulatory developments and these store closures.
Certain consumer advocacy groups and federal and state legislators have asserted that laws and regulations
should be tightened so as to severely limit, if not eliminate, the availability of certain consumer loan products to
consumers, and this has resulted in both the executive and legislative branches of the U.S. federal government and state
governmental bodies exhibiting an interest in debating legislation that could further regulate consumer loan products
such as those offered by the Company. The U.S. Congress, as well as similar state and local bodies and similar foreign
governmental authorities, have debated, and may in the future adopt, proposed legislation that could, among other
things, place a cap on the effective annual percentage rate on the amount of interest or fees that may be charged, ban or
limit loan renewals or extensions (where the customer agrees to pay the current finance charge on a loan for the right to
make payment of the outstanding principal balance of such loan at a later date plus an additional finance charge),
including the rates to be charged for loan renewals or extensions, require the Company to offer an extended payment
plan, allow for only minimal origination fees for advances, require short-term lenders to be bonded or require lenders to
report consumer loan activity to databases designed to monitor or restrict consumer borrowing activity by limiting the
number of consumer loans that customers may receive or have outstanding, or impose “cooling off” periods between the
time a loan is paid off and another loan is obtained. The Company cannot currently assess the likelihood of any future
unfavorable federal or state legislation or regulations being proposed or enacted that could affect the Company’s
products and services. The Company closely monitors proposed legislation being discussed in states where it does
business, especially states where it offers consumer loan products. For example, a ballot initiative is pending in Missouri
that, if passed, would likely require the Company to cease offering its consumer loan products in that state. There can be
no assurance that additional legislative or regulatory initiatives will not be enacted that could severely restrict, prohibit
or eliminate the Company’s ability to offer a consumer loan product. In addition, under statutory authority, state
regulators have broad discretionary power and may impose new licensing requirements, interpret or enforce existing
regulatory requirements in different ways or issue new administrative rules, even if not contained in state statutes, that
could affect the way the Company does business and may force the Company to terminate or modify its operations in
particular states or affect its ability to obtain new licenses or renew the licenses it holds.
Any of these or other legislative or regulatory actions that affect the Company’s pawn or consumer loan
business at the national, state and local level could, if enacted, have a material adverse impact on the Company’s
business, prospects, results of operations, financial condition and could impair the Company’s ability to continue current
operations.
The Consumer Financial Protection Bureau could have a significant impact on the Company’s U.S. consumer loan
business.
The Consumer Financial Protection Bureau (the “CFPB”), which regulates consumer financial products and
services, including consumer loans offered by the Company, has regulatory, supervisory and enforcement powers over
providers of consumer financial products and services, including the explicit supervisory authority to examine and
require registration of such providers. The CFPB has begun exercising supervisory review over and examining certain
non-bank providers of consumer financial products and services, including providers of consumer loans such as the
Company. The CFPB’s examination authority permits CFPB examiners to inspect the books and records of providers of