Cash America 2013 Annual Report Download - page 54

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some or all of its consumer loan business, which could have a material adverse effect on the Company’s business,
prospects, and results of operations, financial condition and cash flows.
The Company’s e-commerce segment uses lead providers to assist it in obtaining new customers, and if its ability to
use such lead providers is impaired, it could adversely affect the Company’s online lending business.
The Company’s e-commerce segment is dependent on third parties, referred to as lead generators or lead
providers, as a source of new customers. Generally, lead providers operate, or work with affiliates who operate, separate
websites to attract prospective customers and then sell those ‘‘leads’’ to online lenders. As a result, the success of the
Company’s online consumer lending business depends substantially on the willingness and ability of lead providers to
send it customer leads at acceptable prices. If regulatory oversight of lead providers is increased, through the
implementation of new laws or regulations or the interpretation of existing laws or regulations, the Company’s ability to
use lead providers could be restricted or eliminated. For example, during 2013 the State of California began requiring
lead providers to be licensed under its existing laws that govern short-term consumer loans in that state. As a result, the
Company has discontinued using lead providers to generate leads for short-term consumer loans in California. While
this discontinuation did not have a material adverse effect on the Company, if other states adopt similar requirements,
the Company’s ability to use lead providers in those states would also be interrupted. In addition, the CFPB has
indicated its intention to examine compliance with federal laws and regulations by lead providers and to scrutinize the
flow of non-public, private consumer information between lead providers and lead buyers, such as the Company’s e-
commerce segment.
Lead providers’ failure to comply with applicable laws or regulations, or the implementation of new laws or
regulations or the interpretation of existing laws or regulations applicable to lead providers, could have an adverse effect
on the Company’s online consumer lending business. Additionally, the use of lead providers could subject the Company
to additional regulatory cost and expense. If the e-commerce segment’s ability to use lead generators were to be
impaired, its business, prospects, results of operations, financial condition and cash flows could be materially adversely
affected.
The use of personal data used in credit underwriting is highly regulated under federal laws and regulations.
The Fair Credit Reporting Act (the “FCRA”), and related laws and regulations concerning consumer reports
have recently been under regulatory scrutiny, and certain related regulations or interpretations of the FTC were revised
by the FTC. The FCRA regulates the collection, dissemination and use of consumer information, including consumer
credit information. The FCRA 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. Historically, the FTC has played a key role in the
implementation, oversight, enforcement and interpretation of the FCRA. Pursuant to the Dodd-Frank Act, the CFPB is
to have primary supervisory, regulatory and enforcement authority of FCRA issues, although the FTC will also retain its
enforcement role regarding the FCRA but will share that role in many respects with the CFPB. It is not certain exactly
how the CFPB will supervise and regulate consumer reporting agencies, some of whom the Company rely upon for
underwriting data. The CFPB may take a different approach than the FTC, including with respect to regulation,
enforcement and supervision. Changes in the regulation, enforcement or supervision of the FCRA may materially affect
the Company’s business if new regulations or interpretations by the CFPB of the FTC require the Company to materially
alter the manner in which the Company uses personal data in its credit underwriting. The oversight of the FCRA by
either the CFPB or the FTC and any related investigation or enforcement activities may have a materially adverse impact
on the Company’s business, including the Company’s operations, its mode and manner of conducting business and its
financial results.
Negative public perception of the Company’s business, specifically its consumer loan business and its business
practices, could cause demand for the Company’s products to significantly decrease.
In recent years, consumer advocacy groups and some media reports have advocated governmental action to
prohibit or place severe restrictions on short-term consumer loans. Such consumer advocacy groups and media reports
generally focus on the Annual Percentage Rate to a consumer for this type of loan, which is compared unfavorably to the
interest typically charged by banks to consumers with top-tier credit histories. The fees charged by the Company and
others in the industry attract media publicity about the industry and can be perceived as controversial by those who do