Cash America 2014 Annual Report Download - page 29

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Anticorruption. 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 requires that companies keep accurate books and records and establish
certain internal control procedures to ensure compliance with the Act.
CFPB. In July 2010, the U.S. Congress passed 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. 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 has been conducting a review of the short-term small dollar loan industry, which includes a
review of payday loans, and has indicated that its “findings raised substantial consumer protection concerns” related
to the sustained use of payday loans. The CFPB recently announced that it is in the late stages of considering the
formulation of rules regarding consumer loans, including certain of the Company’s short-term loan products. These
rules may impose limitations on payday lending, such as additional underwriting requirements, cooling-off periods
between payday loans and limitations on sustained use of payday loans, among other things.The Company does
not currently know the nature and extent of the rules that the CFPB will adopt, but those rules could be proposed
and adopted in 2015.
In addition, on November 20, 2013, the Company consented to the issuance of a Consent Order by the
CFPB pursuant to which it agreed, without admitting or denying any of the facts or conclusions made by the CFPB
from its 2012 review of the Company, to pay a civil money penalty of $5 million. The Company also agreed to set
aside $8 million for a period of 180 days to fund any further payments to any remaining eligible Ohio customers in
connection with the Ohio Reimbursement Program. The Consent Order also relates to issues self-disclosed to the
CFPB during its 2012 examination of the Company, including the making of a limited number of loans to
consumers who may have been active duty members of the military at the time of the loan at rates in excess of the
interest rate permitted by the federal Military Lending Act, for which the Company has made refunds of
approximately $33,500; for certain failures to timely provide and preserve records and information in connection
with the CFPB’s examination of the Company; for certain conduct in the examination process; and certain conduct
giving rise to the Ohio Reimbursement Program initiated by the Company. In addition, as a result of the CFPB’s
review, the Company is in the process of enhancing the Company’s compliance management programs and
implementing additional policies and procedures to address the issues identified by the CFPB. The Company is also
required to provide periodic reports to the CFPB. The Company is subject to the restrictions and obligations of the
Consent Order, including the CFPB’s order that the Company ensure compliance with federal consumer financial
laws and develop more robust compliance policies and procedures. These new policies, procedures and other
initiatives are in many cases subject to review and potential objection by the CFPB, and the Company cannot
predict the timing, substance or effect of any such measures the CFPB may decide to take. Furthermore, the
compliance plan mandated by the Consent Order requires the Company to perform a formal consumer protection
compliance risk review before introducing or implementing new or changed products or services. This requirement
could result in additional delay or cost when introducing or implementing new or changed products or services, or a
decision not to proceed with such initiatives.
For further discussion of the CFPB and its regulatory, supervisory and enforcement powers, see “Item 1A.
Risk Factors—Risks Related to the Company’s Business and Industry—The CFPB has regulatory, supervisory and
enforcement powers over providers of consumer financial products and services, and it could exercise its
enforcement powers in ways that could have a Material Adverse Effect” and “—The Company is subject to a
Consent Order issued by the CFPB, and any noncompliance could have a Material Adverse Effect.”