Let’s look at one store and with the desire of loosening up in some areas where perhaps underwriting is too tight.   Dylan and Jeremy at Cashmax call it “turning a knob” or “moving a lever.” Let’s move a knob or lever with this one store and see what happens.

Doing an assessment and would love TOFSC opinions.  First, we are looking back at recent leads that have been sold through a lead buying network, what are others paying (we are going to assume it is a “FinTech”) for the leads they buy from you? After studying the sold lead what are your takeaways? If the smart FinTechs with all the “AI” and “Machine Learning and “Data” who own over half the Texas market are going for approvals with these customers who apply through you, then how can you learn from that and instead approve more for yourself versus letting go of potentially good paying customers?  See below for some key data points from three recent sold applicants.

$88 – Customer A:

No FT ran.

Online app - Google

Time at address: 5yrs

Time at bank: 2yrs

Bank: Bank of America

Time at employer: 7yrs

Employer: Filtration Group

Income: $6,594.77

**Customer was denied for having too many open loans and frequently being negative. He has loans out with Lend nation, Cash Store, Check n Go, TX Car Title & Payday, World Finance, Integrity Funding, and Easy Financial.

Comment: long time at address, bank, and employer, strong income over $6k, tons of loans out and the buyer did not care.  Also, did not care about account being so far in the negative. 

$83 – Customer B:

FT: 111

Online app - Google

Time at address: 2yrs

Time at bank: 2yrs

Bank: A+ FCU

Time at employer: 5yrs

Employer: Travis County

Income: $3,600 (per app)

Comment: customer was denied for having too many open loans. FT shows loans with a total of $4,508 in outstanding balance. On her banking it shows Credit Ninja ($700 borrowed on 09/14) and Cashnet ($800 borrowed on 08/03).

$18.50 - Customer C:

FT: 111

Online: Google

Time at address: 3yrs

Time at bank: 8yrs

Bank: United Heritage CU

Time at employer: 3yrs

Employer: HCA Healthcare

Income: $2,500 (per app but it was verified at $1660.91)

Comment: FT denied due to having too many open loans and too many loans in collections. FT shows 5 loans totaling $897 outstanding balance and 3 loans in collections. However, we cannot find any loans in her banking history.  Lower income and thus a lower sale amount.  But address, bank, and employer were in the same ranges as the other two customers above.  So, is the income the key factor here? Does that trump all other concerns?

Another one of our generous members shared his opinions on lead sales and how quoting lower first-time loan amounts can hinder growth”

“Typically, a loan selling for greater than $50.00 is auto approved with VERY little underwriting with Fintech. The issue you may run into is loan amount. The consumer most likely will not be interested in a loan less than $500, and sometimes the amount of fees will drive them away. But I would most definitely always reach out to them. Sometimes a local company makes them feel more comfortable, and you can close the deal. Regardless, a lead that sells for greater than $50.00 is a very good lead and most definitely worth your time to reach out.”

Going further with the assessment: pull the last (3) months of denial reasons, break that out by month, by store.  Look at what the largest set of denial reasons is per store.  Perhaps loosen up in one of the largest areas of denial.  Maybe go one or two layers on the 2^nd and 3^rd most common denial reason and.  Loosen slightly implement the lever move with the lowest perceived risk.  Might that lever be “too many loans out” if the income is there? How far will you go on a negative balance?  Also, per the comments above, go back and look at the leads that have sold over the last (3) months over $50 to study again and see what patterns exist.   

Would love to hear from our clients, TOFSC members, and industry friends on this.   Send feedback where you can!

"Trade Groups File Amended Complaint In Texas Lawsuit Challenging CFPB Payday Loan Rule.

In the Amended Complaint, the plaintiffs (our industry) allege that the Rule violates both the Constitution and the Administrative Procedures Act (the APA).  Starting with the Supreme Court’s decision in Seila Law that the Director of the CFPB who adopted the Rule was unconstitutionally insulated from discharge without cause by the President.

The Amended Complaint argues that a valid Rule requires a valid notice and comment process from inception and not mere ratification of the final result by a properly serving Director.

It further asserts that ratification of the payment provisions is arbitrary and capricious because the payment provisions were based on a UDAAP theory expressly rejected by the CFPB in its revocation of the underwriting provisions of the Rule and the CFPB has failed to explain how a lender can commit a UDAAP violation, consistent with the theory of the revocation of the underwriting provisions, when the consumer is free to eschew a covered loan based on a generalized understanding of the risk of multiple NSF fees.

The Amended Complaint takes issue with the payment provisions based on a number of additional alleged infirmities, including the following:

The CFPB provided a lengthy period for the industry to comply with the original Rule but failed to provide any compliance period for the ratified Rule.  Thus, the current Rule differs from the original Rule it purports to ratify in a key respect.

The 36% APR trigger for covered installment loans is fundamentally at odds with the provision of the Dodd-Frank Act explicitly prohibiting the CFPB from establishing usury limits.

The alleged harms the payment provisions are designed to forestall are caused by the banks holding the consumers’ deposit accounts and not by the lenders who initiate payments declined due to insufficient funds.

The Bureau acted arbitrarily and capriciously in extending the payments provisions to multi-payment installment loans, where consumers have lengthy periods of time between installments to respond to failed payment-transfer attempts (and where, we would note, consumers are already free under the Electronic Funds Transfer Act to decline to authorize loan payments through recurring electronic fund transfers).

The Bureau also acted arbitrarily and capriciously in extending the payments provisions to debit and prepaid card transactions, where failed payment-transfer attempts typically do not, if ever, result in fees.  (We have repeatedly expressed the view that this key aspect of the Rule is indefensible.)

The CFPB evidence supporting the payment provisions was insufficiently robust and reliable, especially with respect to storefront and installment loans since the CFPB relied upon evidence about online single-payment loans.

The timing requirements for notices under the Rule arbitrarily prevent consumers from scheduling earlier payments.

The CFPB did not consider whether enhanced disclosures could have adequately prevented the perceived consumer injuries.

We believe that the Amended Complaint represents a powerful attack on the payment provisions of the Rule.

We have only one point we would emphasize to a greater extent:  There is no apparent link between the UDAAP problem identified in Section 1041.7 of the Rule—consumers incurring bank NSF fees for dishonored checks and ACH transactions after two consecutive failed payment transfers—and the burdensome notice requirements in Section 1041.9 of the Rule.

To our mind, these elaborate notice requirements are arbitrary and capricious for this further reason."

Here is a link to the article - thank you Ballard Spahr! https://www.consumerfinancemonitor.com/2020/08/31/trade-groups-file-amended-complaint-in-texas-lawsuit-challenging-cfpb-payday-loan-rule/

Many CAB Consulting clients and TOFSC Members offer Tax Preparation services, and some will be doing it for the first time this year.   I know many who are ready to get after it so let's go!

Here are some things every business needs to know about 2020's Tax Prep Season:

• IRS is expecting more than 150 million tax returns expected to be filed.
• W2’s are already going out, all must be out by end of January.
• Tax filing season is Monday January 27th through Wednesday April 15th.
• Refund advances are happening already.
• Expect heavy loan payoff trends to start mid-February.  
• In 2019, we saw largest payoff week of entire year fall on the week of February 24th to March 2nd which was the exact week when the Earned Income Credit consumers got their refunds and paid off.
• Earned income credit / additional child tax credit – consumers who seek these credits will get their refunds later.
• In 2020, this means that refunds for these consumers will not happen before February 15th.  In, 2019 it was February 27th so it is good that it is 12 days sooner.
• This is the 4th year where there has been a delay on tax refunds for those where the “PATH Act” applies (Protecting Americans from Tax Hikes Act). 

With the key information above you should be able to forecast where loan volume will go, when demand will wane, etc.  The Tax Prep market is very competitive but if you are committed it is a nice way to expand services to your existing customer base and grow an attractive additional revenue stream for your business.  If you have interest in adding these services, reach out to CAB Consulting for assistance!

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Below for the key take-aways for CABs offerring payday, installment, and title loans in Texas.  The report will compare September-October 2018 vs. 2019.  The Septermber-October 2019 part of the OCCC "fiscal year to date 2020”).

·         Examinations are down across the board at every license type except Pawn (89 in 2018 vs. 100 this year).

·         OCCC is reporting they are below target on exams and that they have been doing training and certifications.

·         As well, they are heavily focused on an “enterprise” examination of a large CAB that is taking up 20% of their focus / target.

·         CABs went from 13 examinations in the same period of 2018 compared to just 6 this year.   

·         For whatever reason CABs are way below all of the other license groups in terms of the “acceptable level of compliance” which is a term used for how well we are being examined.  We are hovering in the 55-65% range over thre last year whereas everyone else is in the 80-100% range.  This has been the trend since q4 2018 and would mean that us CABs have not been getting examined much and from our perspective many would agree.

·         Investigations – zero so far for payday and title categories in FY 2020 compared to just 1 on a title loan business same period last year.

·         Complaints – 8 in payday and 10 in title compared to 17 payday and 11 in title which is always good to report.

·         CABs are looking very good with their ratio of complaints to total licenses.  We are at .9 of 1,920 licensees which is at the lower end of the spectrum.

Link to the packet: https://www.fc.texas.gov/sites/default/files/2019-12/121319-fc-packet.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

“On December 9, 2019, at 2:30 p.m., the OCCC will hold a stakeholder meeting on credit services organizations and attorney general opinion KP-0277.

A stakeholder meeting notice is available at: https://occc.texas.gov/publications/attorney-general-opinions. On this webpage, click the link labeled "Stakeholder Meeting Notice." The meeting notice provides additional details and questions on which the OCCC is seeking input.

Stakeholders are invited to attend the meeting in person at the Finance Commission Building, or to listen and participate through an online webinar. To listen or participate online, please follow the instructions available at: https://attendee.gotowebinar.com/register/3659168503230489611

The OCCC will accept comments and suggestions on the questions in the meeting notice until December 12, 2019, at 5:00 p.m.”

OCCC is asking stakeholders for comments and suggestions on the topics below:

1. Does the opinion’s analysis affect the regulatory landscape for CAB transactions (i.e., deferred presentment transactions and motor vehicle title loans)?

2. Must persons engaged in non-CAB transactions comply with all requirements of Chapter 393 other than those that apply specifically to CABs (i.e., Section 393.201(c), Subchapter C-1, Subchapter G)?

3. Are persons engaged in non-CAB transactions subject to the enforcement authority of the attorney general under Section 393.502?

4. Are persons engaged in non-CAB transactions subject to local ordinances and the enforcement authority of local governments?

5. Are persons engaged in non-CAB transactions subject to federal law and the enforcement authority of federal agencies (e.g., the Consumer Financial Protection Bureau, the Federal Trade Commission)?

6. Sections 14.101 and 14.201 of the Texas Finance Code give the OCCC authority to investigate and enforce violations of Chapter 393 with respect to a credit access business. What is the proper role of the OCCC in light of the opinion?

7. Section 393.602 of the Texas Finance Code says a person may not use a device, subterfuge, or pretense to evade the application of Chapter 393, Subchapter G. Under the opinion, what would constitute a device, subterfuge, or pretense to evade the application of Chapter 393, Subchapter G?

8. Section 393.303 of the Texas Finance Code says a credit services organization may not charge or receive from a consumer valuable consideration solely for referring the consumer to a retail seller who will or may extend to the consumer credit that is substantially the same as that available to the public. Under the AG opinion, what would constitute a violation of Section 393.303?

9. Does the opinion’s analysis raise other significant policy issues? 

10. Should the OCCC and the Finance Commission engage in rulemaking related to any of these issues? If so, what is the statutory basis for the rulemaking?

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Many feel these and other pre-paid card accounts carry too much risk because the card holders are not as "married" to the card versus the commitment assumed is had with a traditional bank with local branches. 

We had one TOFSC member call about working with Green Dot consumers and it was brought up that another well-known East Texas operator has been doing it with a high degree of success.  So TOFSC asked this former “CAB of the Year” and “TOFSC All-Star” to share his experiences with this so far. 

Below are some excerpts from the conversation…

Positives:

·         Accepting Green Dot has been viable for (4) years now.

·         Green Dot is loadable at a lot of places – this is good for customers because each load location really acts as a bank.

·         Green Dot cards have a routing #, acct #, bank statement, username, password.

·         Takes direct deposit, SSI, etc.

·         Some customers get paid 2 days early.

Negatives:

·         They offer a “vault” where vendor access to funds is blocked…so cardholders can turn card off / on.

·         Direct Deposit hits at 2am, sends alerts to customer that alert them to debit attempts.

·         You will lose all disputes on chargebacks.

Many storefronts may not be seeing many pre-paid cards as their system is pre-programmed to automatically deny applications with most of the common pre-paid card brands entered into the bank account field.   If you are ready to experiment with Green Dot (largest card brand in the US) then remove that filter and move forward with caution as you learn this niche of potentially higher risk applicants. 

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

We need to watch and learn, let's evolve our businesses by watching their successes and failures.  Where you can, implement their techniques that work, into your CAB's capabilities! Think marketing, underwriting, process flow, etc..

These recent OCCC MSA report statistics show that FinTech now owns the Texas loan market which was not the case a few years back.

Q2 2019 OCCC Report said:

12 out of state online CABs did 67% of all single payment loans.

26 out of state online CABs did 49% of all installment loans. (comes out to $1.3 million per month in loan volume for those 26)

3 years ago the OCCC Q2 report said:

10 out of state online CABs did 50% of all single payment loans.

15 out of state online CABs did 28% of all installment loans.

Wow - just 26 CABs are now doing half of all installment loans executed in Texas.  Consumers are having their voice heard and it is saying "we love FinTech lending!"  Make changes that will mirror your FinTech competitors and tap into a massive market that you may be missing.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

The quarterly Finance Commission Meeting will be this Friday, mostly information will be reported for September to August 2018 vs. 2019...that is their fiscal year.

OCCC will report that:

·         Examinations were down in 2019, went from 638 to 475.

·         CABs went to the bottom in terms of acceptable level of compliance…due to lower examination volume.  This likely means they will get back to CABs soon with a increase in examinations for us.

·         Zero investigations were done in the last year, versus 3 in the prior year.

·         Complaints for payday: down, from 114 to 97.  (down 15%!)

·         Complaints for title loans:  down, from 85 to 59. (down 30%!)

Market Trends for Q1-Q2 of 2019 vs. 2018 were reported versus the fiscal calendar info above:

·         Repo totals are trending upwards and it is thought by the OCCC to coincide with longer payment terms. This was a specific comment, outside of the charts provided and that makes the topic significant. 

·         The OCCC is monitoring this issue to see if it levels out or needs compliance emphasis so head’s up there.  Repo is precarious and they do tend to look deeply into it.  Be 100% dialed in with your compliance measures on this topic, make all of the proper disclosures, send the notices at the correct intervals, and maintain records with excellent organization.

·         # Customers obtaining unsecured loans went up!  In 2018 it was 787,700 and in 2019 it was 799,292 or 1.5% increase.

·         # Customers obtaining title loans went down.  In 2018 it was 135,619 and in 2019 it was 129,163 or 4% decrease.

·         Repossessions went up 32% to 22,005 from 16,620.  These have been hovering in the 16-18k range since 2015 but 2014 had 20,879.

·         There are now just 1,756 locations reporting activity.  Down from 1,832 which is a 4% decrease.

Here is a link to the packet (go to page 249): https://www.fc.texas.gov/sites/default/files/2019-10/101819-fc-packet.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

According to BuiltIn.com ""Fintech" is a portmanteau (combination of two words to create a new one) of financial" and "technology."  It is the application of new technological advancements to products and services in the financial industry."

For those of us in business in Texas, "FinTech" is a term that is slowly evolving away from a vague Silcon Valley-esque concept to something that is becoming more clear and accessible by the week.  It seems like that with the conclusion of the Lend360 Conference last week in Dallas that the buzz around the term hit an all-time high.  A few weeks ago, I shared summary details about the upcoming event, talked about some of the topics, sessions, etc.  Turns out that it was heavily FinTech oriented for sure.  Many of my "google alerts" lit up with FinTech stories and articles after the Conference and it turns out that many friends of CAB Consulting and TOFSC attended as well.  

On September 26th one particular article on Banking Dive.com really hit home and painted a very clear picture of what FinTech is and how it is playing out in the personal loan marketplace.  The article was titled "FinTech leaders have doubled their market share in 4 years" that commented on a recent study done by Experian.  See below for some of the more interesting comments and findings:
 

• Fintechs are providing 49.4% of unsecured personal loans as of March, according to a study released Tuesday by credit reporting agency Experian, more than twice the 22.4% share they held in 2015.
• In 2019 there were 1.3 million new loan originations through March, compared with 656,000 through March in 2015.
• The loans are getting smaller...the average fintech loan was $5,548 in 2019, less than half the average amount of a fintech loan in 2016, when it was nearly $12,000.
• The loans are also smaller than the $7,383 traditional bank loan averaging.  (Comment: It is very possible that the average was driven down by smaller loan amounts in our CAB sector and in other payday loan State markets…for example we know that 26 out of State CABs (most of which are FinTechs) now own 50% of the entire Texas CAB installment loan market per the OCCC Q2 2019 reports, with an average loan amount of $740.  This is really astounding as it seemed like very recently this was 1/3).
• Customers may be increasingly relying on fintechs because they're able to approve and fund a loan more quickly than traditional lenders or perhaps because, with a digital lender, borrowers don't have to leave their house.
• Fintechs were quicker to recognize that consumer lending niche and improve the customer experience with pre-approvals and quicker funding of the loans.
• We're seeing fintechs create digitally streamlined, customer-focused experiences, which may be the key contributor to their substantial growth in the personal lending space," "Fintechs may be gaining traction as they are eliminating potential barriers consumers may face and are creating a more convenient experience."
• Millennial consumers (age 20-37) accounted for 34.9% of fintech loans, compared with 24.9% for traditional lenders.
• Baby boomers (AGE 55-73) accounted for 33.5% of traditional loans, compared with 21.9% for fintechs.”

Here is a link to the article: https://www.bankingdive.com/news/fintech-lenders-double-market-share-in-4-years-experian/563793/

There should be plenty of inspiration here for the forward thinking Texas CAB that is operating in the brick & mortar environment.  How can brick & mortar stores emulate a FinTech?  Of the techniques employed by FinTechs we can do much of the same see below for how you can take one step closer to being a FinTech too by "adding new technological advancements to your products and services."
 

• How can you fund loans remotely because borrowers don't want to leave their house? Do ACH credits and also debit the customer payments from their bank account.
• Do you have e-signature capability? Have customers sign their documents online without coming into your store (also opens up your market to borrowers who would not come in due to privacy concerns).  
• How can you increase processing speed to fund loans quicker? Smart phone app! Send texting with links! Prompt calls from your team to guide the process. What barriers slow your process down?
• What does your website look like? Have it designed professionally and use FinTechs as a creative example fr the look and feel.
• Search Engine Optimization. Are you investing in this every month? Do it.
• Utilize data from Credit Reporting Agencies that allow decision making within seconds.  If you are not with Factor Trust and Microbilt this is them, sign up!
• Access banking activity with instant bank verification tools from Decision Logic and Microbilt.

So there you have it...a road map to becoming a small business FinTech without all that Silicon Valley capital raising and no high dollar public relations firm.  From my perspective we are really all just that close.  The numbers do not lie and as said earlier, the picture is very clear.  The lending market has evolved and if your business has got to evolve too.  

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Since it is in our back yard versus Florida or California wanted to discuss it a bit and give you some information for you to better decide on whether you will or will not attend. 

Many of our vendor and TOFSC sponsor companies will be there so that is a great reason to go out of the gate. (Microbilt, Clarity, Leads Market, Factor Trust Trans Union, Dot 818, Payliance, Repay, Zero Parallel, Infinity, and Loan Payment Pro) along with many others.

Looking at the schedule over the 3-day period...it starts at 1p on Wednesday, goes until 5p. Thursday is 8a-5p, and Friday is 8a-1130a.  The format appears to be traditional conference presentation style, in 8-10 different rooms of the Fairmont Hotel in downtown Dallas along with a larger vendor / sponsor booth gathering area.

Summary of presentation topics:

• Federal law – conversation around lending.
• Small business customer acquisition (could be very relevant to our group).
• All parts and pieces of the “FinTech” industry – this is the major component of the conference.
• 2020 election impact on FinTech.
• Investor outlook on Fintech.
• Conversation on moving into “alternative credit market” and products / services in the “non-prime market.
• How FinTechs work with banks, there is more than one of these, so it appears to be a big part of FinTech operations…interesting.
• How to use multiple domain names for your business online to drive traffic to your business (could be very relevant to our group).
• Staying ahead of fraudsters (could be very relevant to our group).
• Data security.
• FinTech investors and other capital providers will be in attendance and will speak.
• Advertising and marketing round table (could be very relevant to our group).
• Making your business recession proof.
• Optimizing debt selling and collections strategies.

Costs $2,600 to attend and here is a link to more information:  https://www.lend360.org/schedule/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

It seems like each week there is a new Silicon Valley FinTech anti-payday loan venture that is launched with millions in funding and all the slick PR you can buy. There is a formula to the launches, and most have the disruptor mindset but at first glance to many observers, it is clearly a well disguised online payday loan business. It was stated in the Post's article that Earnin has an $800 million valuation - how much of that do you think came from being hyped by the media? Funny thing is, much of the media that promotes these startups don't do their homework and would tell you they despise the payday industry if you asked them. Imagine that!

Earnin has been around for several years now and the "tip" model they use is now coming into question. They don't charge a fee for the loan they just say "tip us if you liked it" or something along those lines. The New York Post says Earnin "has been scrambling to escape regulatory heat over concerns that it has been doing illegal payday lending in the Big Apple.". It was surprising to read that the tips being collected were $14/$100 per week.  That comes to $28/$100 for two weeks. In Texas the average fee range per $100 borrowed is $20-$25/$100 so that tip is really popping up on some radars now. When you calculate the APR on $28/$100 that is getting into the 600%+ APR range which will typically cause a left leaning liberal with consumer advocacy on their mind to simultaneously combust.  
 
Now, the New York Department of Financial Services appears to be one of those who are very hot under the collar over Earnin doing transactions with New Yorkers. As well, 11 other states are investigating Earnin for violating usury laws. New York sent a subpoena to Earnin in March, shortly after that the tip feature was turned off for New Yorkers. Earnin is now having to explain the switch off, and that loan amounts were not driven down by poor tippers which looks very bad. There were some leaks from former employees apparently. In one of those leaks “Earnin also considered going after perceived enemies. One employee suggested the company hire a private investigator to look into The Post reporter who had written the story" about them. Whoa - this is getting good!

We’ll see how it all plays out, Earnin seems to be getting lined up for a major hit on the chin for other FinTech lending disruptors with similar shell game models. Those who are out in front as Earnin has been, often times are going to have to survive the legal battles to prove out the model while others who are not quite so visible, lay low and quietly ride out the process.

Here is a link to read more from the New York Post:

https://nypost.com/2019/09/01/cash-advance-app-earnin-changes-its-tune-amid-nys-probe/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers. He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Did you know that for many the Back to School season each August is the second highest seasonal demand period for the payday industry?  Only the Christmas and New Year Holiday time frame beats Back to School in terms of seasonal demand. For Texas Credit Access Businesses offering cash advances, payday loans, or title loans, now is the time to invest in marketing to new and existing customers.  It is imperative that all of your marketing, promotions, social media, and referral programs are firing and connected.  Campaigns started as early as July 28th and are pushing hard until at least the first day of school. In Texas most have that date set at August 15th.   

Revenue and payment wise, many Members of our group still recall August of 2018 where we had (5) Fridays in the month and also with the way the calendar fell the 1st & 3rd pay dates fell in August, for August in September!  So those things alone meant a record number of payments due and a record revenue month for many.  While we do not have the same thing happening this month with the pay dates, we still have the increase in demand to focus on, so make that marketing happen now! Don't forget to keep your teams happy, motivated, and focused this month as the workload can increase with higher demand and payment volume.

One great idea to for blog readers that is happening in Central Texas is doing back pack give-away promotion where new customers are entered for a chance to win back packs filled with a variety of much needed school supplies.  This has been warmly received by customers.  Social media has been showing the love with lots of shares and likes of the images we posted of the backpacks so that is very good.

How do we know Back to School demand is here?  There are a number of criteria that paint a very clear picture, for starters lead conversions were up, we saw 12% on one source versus mostly having been in the 5-10% range in prior weeks.

Another sign - loan volume is way up August 1st to 8th versus July 1st to 8th:

• Funding volume is doubled.
• New Customers doubled.
• Online applications up 38%.
• Reloans doubled.
• Increases tripled.
• Denials down 10%.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Recently another new dynamic in our industry has surfaced and this is reminder that as a small business owner in the payday loan-cash advance-installment loan industry, everyone on your team needs to continually study and learn customer behaviors. 

What is this new dynamic? It is the borrower habit of switching their debit card “on” “off” by logging into their bank account, and with the click of a button, they lock out any charges from occurring to that card number.     

By switching off the debit card number, consumers are given a tool to protect themselves from unauthorized charges which is a good thing.  But it does lock out authorized charges as well.  Once the consumer has located a lost card or perhaps successfully evaded authorized charges (mostly during the pay-date starting early in the a.m. and going all hours that due date of the authorized charge) then they can switch the card back “on” begin using it again.   

This tool that consumers have been armed with is similar to the red flag behavior of withdrawing all of the recently direct deposited pay the moment it hits their bank account, which has long been a warning sign of a consumer who does not want to make their payments.

What Consumer Advocates rarely want to focus on is how many borrowers default, or who evade, outthink, and delay making on-time payments.  This problem is directly correlated to the higher APR’s in our industry which are set where they are, to offset defaulted loan costs.  Defaulted loans are not good for anyone and for the small business owners in Texas it is a constant concern.  Hoping that sharing this recent observation will assist you and your team in your ongoing education in our industry today!

Banks that feature the "turn card on / off function that we have tracked so far: 

• Chase.
• RBFCU.
• Abilene Teachers FCU.
• Austin Telco.
• University of FCU.
• Wells Fargo.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

In today's world of the smart phone, apps, and Amazon, every retail "brick and mortar" business needs to evolve around the newer consumer behaviors in the virtual marketplace.  As surprising as it is, many companies like Toys R' Us and Sears with decades of brand loyalty just could not make their model compete and evolve in the fight against online shopping namely Amazon.  Things could have worked out much better for these two legendary American brands if they would have seen the writing on the wall much sooner.  

What would the writing on the wall have said?  Invest in online, get an app, decrease store expenses, close losing stores, have the best web site in all your industry!  Be prepared if you were faced with having to operate 100% online. Could you?   

A recent article on CBS News.com titled "Retail graveyard: More than 7,000 U.S. stores have closed this year" was posted and it was incredible to see the drastic number of store closures this year versus 2018. Check out these statistics:

·  "Last year, the U.S. lost 5,864 stores, while 3,258 opened.

·  So far this year, 7,062 have closed, while 3,017 have opened.

·  All told, the retail closures in 2019 could easily double 2018's total -- extending beyond 12,000.

Here are some of the well-known brands who are closing locations: Payless Shoe Source, Gymboree, Family Dollar, GNC, Walgreens, Zales/Kay/Jared Jewelers, Rent-A-Center, Office Depot, Lowes, Kmart, CVS, JC Penney, Party City."

Comment: The bottom line of this is that it is a reminder for all of us that we must be fully involved in the online aspects of the payday industry.  The most commonly used software amongst our group is Infinity Software.  Infinity Software has every single tool that we need to go toe-to-toe with the FinTech’s who dominate the Texas market online.  Did you know that about 15 out of state FinTech’s have a bigger share of the Texas market than the Houston region that includes all cities and towns around it?  That comes to more than 1/3 of the entire Texas market!  Embrace online lending capabilities and trim away the antiquated facets of your business.  This means - invest in SEO, market online, online applications, killer website, e-signatures, debit card payments, ACH funding (credits), text messaging, and more!  

Infinity Software: https://infinityels.com/

Online marketing, websites, SEO: https://hearstdms.com/localedge/tofsc

Link to the CBA article: https://www.cbsnews.com/news/more-than-7000-us-stores-have-closed-2019-final-tally-could-exceed-12000/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

This week an interesting article came out in Fox Business (written in Motley Fool) titled "4 reasons hourly workers reject jobs - and what to do about them."   Many of small business owners in Texas could be seeing a rise in the so-called millennial generation phenomenon of "ghosting." According to the Urban Dictionary "Ghosting" means the shutdown/ceasing of communication with someone without notice.  Check it out:  https://www.urbandictionary.com/define.php?term=Ghosting  

In the cases where Ghosting occurs, it starts with a "no show" of usually a newer hire within the first week or two of employment.  The ghosting employee does not call, text, or email that they have quit the job.  Also they either turn off their phone or block your phone number and send you straight to voicemail when you try and call.  It is truly a strange and often occurring phenomenon...gone are the days when someone has the personal honor to at least let someone know that you have abandoned a job so they can make arrangements to run their business.  C'mon kids!  

In these boom times in the Texas job market it is likely that the new hire knows they can walk into just about any local service business of their choosing and get a new job that day.  The article shares four approaches that could help our payday loan, title loan, and cash advance business owners in Texas to address the problem, very glad to share!  

"1. Location

Workers want a short, convenient commute.  When interviewing, the person wants the job at the time and will not be considering how inconvenient a long commute might be.  Do some thinking for them and consider how long that drive is before you hire them, and they ghost you on day 3 because the drive it too long.

2. Scheduling

These days, workers want the option to choose their own hours and uphold a schedule that fits into their lives. If you're too rigid with your schedule, you may lose out on talent that could otherwise serve your business well.   Many of us have set store hours but varying things in terms of who opens and closes from week to week could be an option.  But when there's room for flexibility, it pays to offer it.

3. Job function

Nobody wants to sign up for a boring job, or one whose daily tasks seem glaringly unpleasant. In today's competitive job market, hourly workers can afford to be more choosey about how they spend their days, so if you're looking to fill some positions that are heavy on grunt work, you may need to rethink those roles and find ways to incorporate some more appealing tasks into the mix.  

4. Pay

It stands to reason that hourly workers would rather earn more money than less. And in some cases, a small bump in pay could spell the difference between attracting talent versus having your job offers rejected. To this end, review your compensation strategy and make sure the hourly wages you're dishing out are on par with your competition. If they're not, you may need to shift some resources to pay your workers better.

The right hourly workers can add a lot of value to your business, and not having to pay on a salary basis means that you, as an employer, get more flexibility with regard to how much those employees cost you.

But the last thing you want to do is spin your wheels in an effort to attract and keep hourly workers, so if you've been struggling to hire or keep your team members, keep the above points in mind. In many cases, being a bit more generous, creative, and flexible could help you grow your staff and get your business the support it needs to thrive.”

Here is a link to The Motley Fool / Fox Business article cited above: https://www.foxbusiness.com/small-business/4-reasons-hourly-workers-reject-jobs-and-what-to-do-about-them

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

This blog is about one of the key fundamentals of operating a loan business...and that is importance of debiting the customer bank account as close to the time of direct deposit as possible.   Let's share come knowledge about a development at Randolph Brooks Federal Credit Union (RBFCU) who operates in the San Antonio / Austin region with a significant number of branches.  On June 16^th RBFCU sent out the following message to its customers:

“Dear Member,

Beginning June 16, 2019, members enrolled in recurring direct deposits through RBFCU will have access to their ACH funds earlier than before. ACH transactions eligible for early pay include payroll, retirement, Social Security and other recurring credits deposited to your RBFCU accounts.  Additionally, all ACH credits will be posted the same day we receive them. Your ACH credits will be posted by the effective date of the ACH. “

With this early pay feature, you can enjoy these great benefits:

      •  Faster access to your cash - The money is deposited into your account and ready to use a day before payday.

      •  No lost checks - You don't have to be concerned about your check being lost or stolen.

      •  More control of your money - With the money available up to a day early, you can budget better.”

Make sure your team is educated about this and that RBFCU customers have their due dates set properly.  By "properly" I mean that you should make the due dates on the loan be the same as the deposit dates on their payroll direct deposit at RBFCU. That would be (1) day sooner than if you did not know about the policy.  This will of course result in more successful payments which is good for the customer, and good for your business.  Other businesses may not know this is the policy at RBFCU and they would set the due date to be on Friday instead.  

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Last Friday June 21st was the Finance Commission Meeting.  See below for come solid details on Compliance and CAB transactions.  The compliance figures compare Sep-2018-April 2019 to Sep 2017-Apr 2018 and the transaction statistics are for Q1 2019.   Interesting to see title loans on the uptick and I also have my eye on decreasing # of reporting locations...

Compliance:

·         Examinations: 298, 163 the year prior.

·         Investigations: 1, 3 the prior year.

·         Complaints: 83, 138 the prior year.

·         CABs ranked second to last in OCCC complaints by industry.

Transaction reporting for Q1 2019:

·         426k unsecured loans, down from 453k in Q1 2018, 5 year avg is 488k.

·         67k in title loans, up from 65k in Q1 2018, best year since 2015 which had 68k.

·         11,438 repos in Q1, highest total ever reported, up from 8k in 2018, average is 8-9k.

·         1,745 locations reporting, down from 1,841, 2014 had 3k reporting that is down 40%.

·         343k consumers took a payday / installment loan out, 356k prior year.

·         60k consumers took a title loan out, 58k prior year.

·         Average unsecured loan amounts were $469 payday, $650 for installment.

·         Average title loan amounts were $1,518 single pay, $1,279 on installment.

·         Fees on unsecured loans were $23/$100 single pay, $133 on the average $650 installment loan.

·         Fees on title loans were $15/$100 single pay, $118 on the installment.

·         54% of CAB unsecured loans were installment, prior years have been 45,42,39,35,32, big jump.

·         53% of CAB title loans were installment, prior years have been 55,43,41,13,17, WOW what a change from 2014 at 17%.

Rob Norcross of CSAT shared with me that the Finance Commission took up a conversation at the meeting about the huge increase in repos reported in Q1 which was a 39% increase over Q1 2018.  He asked for our input on what TOFSC membership feels might have attribute to the abnormality.  The first thought was definitely that it would be irregular to see a spike in repos in Q1.  Why? Repos / defaults of any kind are almost always down in Q1 as payoffs increase due to tax refund money flowing into borrower bank accounts.  This starts in early February and continues mid-April typically.

One thought that come to mind right away was that a larger operator could have done an annual “repo dump” where they just send all defaulted title loans out for repo at once versus as the loans default or are written off over the course of a month.  Perhaps the strategy is that this one large or several larger CABs know borrowers will have more money from a tax refund to pay the loan off if the repo process was started, to act and get the loan back to current.  Or, perhaps the CABs felt after repo the borrowers would be more likely to have the money to pay off the loan (after their car was repo-d) to get their car back.  It is difficult to speculate, under no circumstances would TOFSC members conduct business in such a way that is causes a large increase in repossessions. Bad for the customer, and serious drag on business activity to have to sell cars afterwards.  It will be interesting to see if the cause of this is ultimately found out and TOFSC will keep its ear to the ground on it!

Link to Finance Commission Packet: https://www.fc.texas.gov/sites/default/files/2019-06/062119-fc-packet.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

House Bill 996 a "Debt Buyer Bill" is set to be signed by Governor Abbott.  This particular bill limits when a debt buyer can initiate legal action or arbitration to collect consumer debt. It also requires specific notices to be provided to the consumer with respect to out-of-statute debt.  The new provisions are effective Sept. 1, 2019.  Texas Credit Access Businesses definitely work with debt buyers who will need to conform to the new rules.  

Also, it would be a good idea to get some input from our friends at Kilpatrick Townsend & Stockton (https://www.kilpatricktownsend.com/) on whether any of this new bill can be applied to a Credit Access Business who takes ownership of a customer debt after they pay out the third-party lender under the guaranty arrangement.  

What is the definition of a Debt Buyer:

·         A person who purchases or otherwise acquires a consumer debt from a creditor or other subsequent owner of the consumer debt (thinking out loud, is this a CAB??), regardless of whether the person collects the consumer debt, hires a third party to collect the consumer debt, or hires an attorney to pursue collection litigation in connection with the consumer debt.

The term “Debt Buyer” does not include:

·         A person who acquires a charged-off debt incidental to the purchase of a portfolio that predominantly consists of consumer debt that has not been charged off; or

·         A check services company that acquires the right to collect on a paper or electronic negotiable instrument, including an Automated Clearing House (ACH) authorization to debit an account that has not been processed.”

·         The legislation prohibits a debt buyer from bringing suit or initiating arbitration on consumer debt if the applicable statute of limitations statute of limitations on a consumer debt has expired it cannot be revived.

Consumer Notices must be provided:

With the passage of this legislation, Texas joins other jurisdictions in having to provide notices regarding the expiration of the statute of limitations. (the statute of limitations is 6 years from due date)

In Texas, one of the three required disclosures will apply depending on whether the credit reporting period has expired and whether the debt buyer credit reports.

1.      If the credit reporting period has not expired and the debt buyer does credit report this is the notice that must be sent:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. IF YOU DO NOT PAY THE DEBT, [INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO CREDIT REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS REPORTING. THIS NOTICE IS REQUIRED BY LAW.”

2.      If the credit reporting period has not expired but the debt buyer does not credit report:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. THIS NOTICE IS REQUIRED BY LAW.”

3.      If the credit reporting period has expired:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT, AND WE WILL NOT REPORT IT TO ANY CREDIT REPORTING AGENCY. THIS NOTICE IS REQUIRED BY LAW.”

The notice must be “in at least 12-point type that is boldfaced, capitalized, or underlined or otherwise conspicuously set out from the surrounding written material.”

It is important that it is mentioned that the content from this blog post was gathered  from the www.Consumerfsblog.com which is a publication of Maurice Wutscher, a financial services law firm.  Our Texas Credit Access Businesses sincerely appreciate the content which was directly cited, summarized, reorganized, and paraphrased in this post.  Here is a link to their blog / website:

https://consumerfsblog.com/2019/05/texas-passes-debt-buyer-legislation-addressing-out-of-statute-debt/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Chris Talgo, a columnist at Townhall.com did a phenomenal job on his recent column regarding Bernie Sanders and AOC's Loan Shark Prevention Act.  I would say he slam dunked the pair's "Act" quite nicely.  Within the piece, several hard-hitting facts & statistics were used to counter many assertions made by the two in their recent video roll out of the Act.

Bernie was quoted as saying “Under the legislation we are introducing today, we would establish a national usury rate to make sure that no bank or store in America could charge an interest rate higher than 15 percent.”   36% would be a killer for the payday industry, 15% would take down the credit card business and many banks.  Socialists...

Chris Talgo wrote that "it is true that some creditors, such as payday lenders, charge high interest rates. However, these moneylenders are simply filling a niche (and desired) role in the market. For those who have a history of not repaying loans (high-risk borrowers), payday lenders are willing to provide credit. In turn, because it is very likely a large number of these high-risk borrowers will not repay their loans, payday lenders charge more interest to mitigate the increased risk they assume. In other words, there’s a good reason why payday lenders charge higher rates, and it’s not because they are greedy." 

A 2016 CFSA report was cited that found “Over nine in ten borrowers agree that payday loans can be a sensible decision when consumers are faced with unexpected expenses. … Nearly all borrowers (96%) say the payday loans they have taken out have been useful to them personally, with two-thirds (66%) saying they have been very useful. … Moreover, borrowers are likely to recommend payday loans to friends and family (75%) and support allowing other regulated lenders to offer payday loans (78%).”

Here is another finding that Mr. Talgo shared: According to the Fordham Journal of Corporate & Financial Law, payday lenders have an average profit margin of 3.57 percent. To put this in perspective, the average profit margin is 7.9 percent for all U.S. companies."

Mr. Talgo pointed out that "aside from the fact they are woefully wrong on the merits of moneylending, Sanders and Ocasio-Cortez’s bill would do irreparable damage to the borrowing prospects of those with poor credit scores, the very constituency they are supposedly trying to help. Ample research shows payday lenders (and other so-called “usury institutions,” as defined by Sanders and AOC) have increased household welfare." 

Another hard hitting fact in the column was that "According to a report by the New York Federal Reserve, “in states with higher payday loan limits, less educated households and households with uncertain income are less likely to be denied credit, but are not more likely to miss a debt payment.”

And to add to the slam dunk fest, it was stated that a study titled "Restrictions on Credit: A Public Policy Analysis of Payday Lending," found “no empirical evidence that payday lending leads to more bankruptcy filings, which casts doubt on the debt trap argument against payday lending.”

Great job Chris Talgo and thank you for taking up the argument with rock solid numbers.  Here is a link to the column:

https://townhall.com/columnists/christalgo/2019/05/15/aoc-and-bernie-jump-the-shark-with-loan-shark-prevention-act-n2546379

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Laurie Hobbs at the OCCC sent out an email to industry "Stakeholders" on Tuesday regarding the continuation of the Sunset process at the OCCC.  Next up is the Stakeholder Meeting to discuss rule amendments.  See below for OCCC's comments on what will be done and how you can participate.

• "OCCC would like to inform us of a Sunset Bill / Rule (HB 1442) pre-comment draft that the agency plans to discuss at the upcoming Stakeholder Meeting on Thursday, May 23, 2019, at 2:00 p.m. 
• Here is a link to the draft: http://occc.texas.gov/publications/rules
• The stakeholder meeting relates to the May 14 pre-comment draft of rule amendments to the OCCC’s licensing and administration rules. 
• The amendments are intended to implement HB 1442's licensing and administrative provisions by: clarifying provisions on license term, renewal, and expiration for OCCC licensees and registrants; specifying procedures for how the OCCC processes consumer complaints; and specifying procedures for appealing the denial of a debt cancellation agreement.
• Stakeholders are invited to attend the meeting in person at the Finance Commission Building.
• Stakeholders will also be able to listen to and participate in the meeting through an online webinar. If you are interested in listening or participating online, please follow the instructions available at the following link:  
• https://attendee.gotowebinar.com/register/3990124797477144331
• Informal precomments on the OCCC's May 14 draft of licensing and administration rules must be received by 5:00 p.m. on Wednesday, May 29, 2019."

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

For the benefit of those who read our posts we are sharing a snapshot on the progress of a five-location retail chain's Search Engine Marketing Campaign after six months.  This particular business offers cash advances and title loans in the Central Texas area.  What do you think?  Is it doing well with SEO? Room for improvement?  How about your title loan or cash advance business?  Is it doing better or worse?  

The results shared here are what will net a business 148 online applications in one month which was the actual April 2019 total.  It could and probably will be higher in future months because this time of year traditionally is the lowest in demand.  That being said, right now this cash advance and title loan business is achieving some of its best results since starting the SEO campaign in late September 2018. 

The SEO team at Hearst Media Services, https://hearstdms.com/localedge/tofsc, (contact Ahmed Khalaf and team!) is handling this campaign and provides monthly reports that summarize where the business is at in a number of ways, what changes are made by them for you to improve, etc. 

Statistics that were reported for April:

·         43,000 impressions.

·         588 clicks.

·         148 online applications.

·         Online traffic has increased 20% since starting the SEO campaign in September 2018.

·         Cost broke out to $6.35 per lead generated.

What are the top sources of traffic?

70% Google, 20% is from actual entry of the website address, 2% Yelp, 2% Facebook, the rest was “others.” 

Comment: No surprises there, Google is king, and everyone needs to max out on this search engine every way they can! Yelp is proving to be a good source too, check them out directly.

What pages are visitors entering on?

Home, then contact us, across the board. Big drop off after that. 

Comment: This tells us site visitors check out the business online, get a feel for it, then look for a phone # to call and get a live person.

What cities are generating organic traffic?

Top 10: Austin, Dallas, Abilene, Houston, San Antonio, Waco, Round Rock, Pflugerville, New Braunfels, San Marcos. 

Comment: Strange to see Dallas and Houston pop up in these stats as the business is not located in those cities.

What search terms are leading customers to the website?

Top 10: Title loans, car title loans, Star of Texas, Title loan, Car title loan, Star loans, Auto title loans, Installment loans company, Installment loans Texas, Title loan near me.

Comment: Surprised that cash advances was not at least half of the top six results here. Not understanding why title loans was so popular.  Is the website more optimized to title loans versus cash advances?

For more information on the topic of SEO for your cash advance, payday loan, or title loan business, feel free to reach out to Michael Brown at the contact below, and to get in direct contact with the real experts call Ahmed Khalaf at 716-541-4174, or email him at akhalaf@hearst.com.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

CFSA has been urging industry stakeholders to submit a comment letter to the CFPB regarding the  “CFPB Rule Proposal to Reconsider the 2017 Payday Lending Rule.”  

Again, right now the CFPB ATR and Payment Provisions are on hold which is referred to as a “stay.” 

See below for what CFSA is saying we need to do, go for it!

Submit Your Comment by May 15

 The CFPB has issued a “Payday Reconsideration” Notice of Proposed Rule Marking and “NPRM,” which seeks comment on whether it should rescind the mandatory underwriting provisions of its 2017 Final Rule. The Payday Reconsideration NPRM has a deadline of May 15 to receive public comments.

CFSA appreciates and supports the CFPB’s proposal to revisit and rescind the mandatory underwriting requirements that were finalized in its 2017 Final Rule for small-dollar lending. From our perspective, the 2017 Rule was a needlessly complex and overbroad proposal that would have caused irreparable harm to industry businesses and eliminated an important form of credit to consumers. At the same time, we remain concerned that the payment provisions, which are contained in the same 2017 Rule, are also not being revisited in this current rulemaking proposal.

At this time, we ask CFSA members to submit comment letters during this rulemaking comment period.
 
To assist our members, and to better ensure a consistent message, CFSA offers a detailed outline with sample themes and messaging that can be used to draft a company (or individual) comment letter.  Here is the link:

https://gallery.mailchimp.com/24e3495ba138af4c830a9e396/files/20d6e1e1-ae11-470f-a3d7-9f9b880d351e/20190325_CFPBNPRM2019_NPRMPaydayReconsideration_CompanyComment_ShortOutline.pdf

Once you have a comment prepared, here’s some information on how to submit it to the government:

Your comment must be received by the government on or before Wednesday, May 15, 2019, at 11:59 pm eastern time. 
 

Be sure to identify the Docket No. CFPB–2019–0006 at the beginning of your company’s comment letter. 
 

You can file your comment letter one of three ways:

Electronic Submission via Regulations.gov at:

https://www.regulations.gov/document?D=CFPB-2019-0006-0001

Email to:

2019-NPRM-PaydayReconsideration@cfpb.gov
 

Mail/Hand Delivery/Courier to Address:
Comment Intake
Bureau of Consumer Financial Protection 
1700 G Street, NW 
Washington, DC 20552

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

The Austin American Statesman put out an article this week ("Senate votes to limit city regulations on private businesses.") that discussed two bills in the legislature that were about to be passed by the Senate. The bills, SB 2486 and SB 2488, will limit local government control over private businesses. It appears the bills are directly focused on employer issues like hiring practices and break times.  

After hearing some very familiar talking points that support the authority of State law over local ordinances, it stands to reason that the passage of bills like these could lead to better days for Credit Access Businesses offering payday loans, installment loans, and title loans in Texas. 

Of course, an Austin City Council Member testified at a hearing against one of the bills.  Greg Cesar said one of the bills "disgracefully" preempted local regulations.  Let me remind Councilman Cesar of what a disgrace the attempted enforcement of the Payday Loan City Ordinance has been for the City of Austin. They have been involved in two lawsuits for 2+ years against Speedy Cash and Advance America. It has been a back and forth legal battle that has consumed City of Austin resources for far too long and even with all that money and time spent, no victory for Austin.  I am sure the residents of Austin would rather have their tax dollars spent on more meaningful subjects. That is the disgrace! 

Now that I got a good swipe in against the Austin City Council, I will get back to two strong talking points I saw used. Each of them can be used almost as a mirror image in the argument for preemption of the Payday Loan City Ordinance by existing Texas law.

"One comment dismissed concerns over water breaks and work environments, stating that the Occupational Safety and Health Administration already regulates workplace safety."  (This is exactly the same scenario with Credit Access Businesses - we are already regulated by the Office of Consumer Credit Commissioner).

Senator Creighton said: "I believe in uniformity across the state for the applicant and also for the employer, and it should happen in this building." (This really applies to any business in Texas with more than one location.  Operating Credit Access Businesses in a City with an Ordinance and one without an Ordinance causes operational confusion and customer inconvenience).

At this point I believe that many Cities in Texas no longer look at passing the Payday Loan Ordinance because they know if they pass it and enforce it they will be looking at allocating several years’ worth of time in lawsuits over it.  So that addresses the further spreading of the Ordinance.  In terms of rolling back existing Ordinances across Texas, perhaps there is some opportunity ahead where the passage of these two bills creates the precedent for leaders in our industry to get that done!

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

We have been hearing a lot lately about the continued decline of retail business in the US.  Zales and Jared jewelry retail stores are the latest to announce closures of hundreds of locations.

Online is booming and it seems like Amazon rules the world.  If your business does not have an online presence you are missing out on a lot of opportunity because your pure brick & mortar market is shrinking by the minute.  Consumers are evolving and many low to middle income consumers are willing to do more and more to get access to credit at crucial times.  How will you engage with this new dynamic?

Forbes.com featured an article that discusses how increased online markets are opening a consumer’s willingness to share their personal info online while also touting the strengths of today's alternative data.  I included some excerpts below.

“People Are Plenty Willing To Share Personal Data To Get A Better Loan."

• New research suggests that people are surprisingly comfortable sharing their data as long as it’s being put to good use, especially in the world of lending.
• A recent Harris Poll found a surprising consensus among American adults — 71% of those surveyed said they would be willing to share more personal data with a lender if it led to a fairer loan decision.
• More significantly, the Harris Poll shows that the majority of consumers feel unfairly treated by the current system.  More than 80% of African-Americans and Hispanics – and 7 in 10 of all adults – say they wish there were a better way to prove themselves to lenders.
• But in today’s era of large-scale data collection and unlimited computing power, the traditional credit score is showing signs of age and mathematical limitations.
• Consider some of the things credit scoring excludes: your job history, your roots in your town and thousands of other bits of information that are left untapped. It’s no wonder 70% of people polled say it’s difficult to get financial institutions to see them as anything but a number between 300 and 850.
• One-third of renters say credit scores have kept them from buying a home.   
• Alternative data simply means anything that’s not included in calculating a traditional credit score. It could include timely utility payments, history of holding down a job, even large debts you had years ago (outside of the traditional credit score models) that you successful paid off.
• Bringing that added data into the credit scoring decision creates a more nuanced picture of borrower risk, helping banks spot worthy borrowers further down the credit spectrum (and flagging troublesome borrowers who look good on paper).
•  The Omidyar Foundation found that in the six biggest emerging economies, using more data and machine learning techniques can get as many as 580 million unbanked people into the financial mainstream.”

Many of us are using "alternative data" with Factor Trust and Microbilt (often referred to as "Credit Reporting Agencies" or “CRA’s”).  If you are not, get on it as soon as possible!  

Factor Trust was recently acquired by Trans Union, and another CRA "Clarity Services" was acquired by Experian awhile back. In the future hopefully that will mean better things for how CRA’s are utilized by our industry and will also mean more robust access to credit for consumers.”

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

One popular counter to the CFPB and it's regulation of the payday industry is that oversight should be shared with or even shifted more so to State regulators versus the much maligned federal agency.  

In the case of Texas, that means our friends at the OCCC would be that ideal option.  The highly experienced leadership at the OCCC has been overseeing various consumer lending industries for decades.  This agency without a doubt is much more qualified to license, regulate, and examine Credit Access Businesses offering cash advances, installment loans, and auto title loans to Texas residents.

For years many small business owners, clients of CAB Consulting, and Members of the Texas Organization of Financial Service Centers have wondered what the CFPB truly knew about the payday industry other than what told to them by consumer advocate groups who despise the industry.  Then when the CFPB Payday Loan Rule was finally released it was again evident that that CFPB knew nothing about the industry...other than they wanted to kill it!  Just like many "CABs" in Texas, Mick Mulvaney wants to shift the responsibility in the direction of State regulators.  

Here is a quote from a recent article written by Joann Needleman and Timothy Lee, of Clark Hill:

"At a recent gathering of states attorneys general, Mick Mulvaney, Acting Director of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) indicated his preference that they take the lead on the enforcement of consumer protection laws along with state regulators. According to Acting Director Mulvaney, “States know best how to protect their own consumers."

Here is a link to the article: http://www.insidearm.com/news/00043837-cfpb-deferment-enforcement-authority-stat/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

OCCC and Finance Commission Report Information, Meeting is Friday 10/20 and will summarize data from September 0f 2016 to August of 2017.

CAB Examinations:  Down from 707 in 2016 to 652 in 2017 (-7%).

CAB acceptable level of compliance: 98.93%.

Complaints processed payday: 208 in 2016 and 148 in 2017 (-28.8%).

Complaints processed title: 198 in 2016 and 147 in 2017 (-25.7%).

Top 3 Complaint Types Payday:

Overcharges:8.8.

Financial hardship:14.9.

Payment processing: 25.7.

Top 3 Complaint Types Title:

Financial hardship: 13.6.

Repo: 14.3.

Payment Processing: 21.8.

Jan-June 2017 and other years during same period,  CAB Reporting said:

Unsecured installment and payday loans have been almost exactly flat in the last (4) years going back to 2014, hovering in the 1.044 to 1.1 million loans range for the Jan-June periods. 

For comparison, the highest year was 2013 with 1.2 million loans and 3,176 locations reporting activity.  In 2017 the locations totals are 1,817 – this is a new number I have been seeing 2,200-ish.  

(ATTENTION CITIES AND CONSUMER ADVOCATES WHO PASSED CITY ORDINANCES TO PASS - ARE YOU READING THIS???) 

Title loans in the last (2) years are hovering flat in the 129,000-133,000 range, with a steady drop from 2013 when there were 241,000 in the same six-month period.

Repos – steady in the 15,000 range the last (2) years.

# Consumers using products Jan-June of 2017, 2016, 2015:

Single payment payday loans in 409k, 453k, 510k

Unsecured installment loans:416k, 385k, 365k

Single payment title loans: 63k, 71k, 109k

Installment title loans: 53k, 53k, 36k

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

CFPB Rule came out today.  It is 1,600+ pages and I am hearing from folks on it but no one knows a lot at this point.  I need to start reading and as I connect with others to learn more I will of course relay what people are saying.

Effective date is 21 months after date of publication in the Federal Register. I do not know when it was or when it will be in the Federal Register.  As far as who it covers and what kinds of loans it applies to, I need to look.  

Here is the link:

https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201710_cfpb_final-rule_payday-loans-rule.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

So much time and effort is spent on attacking the "payday loan industry" it is baffling.  Why do consumer advocates and the CFPB refuse to make the banking industry Public Enemy #1 instead?

See below for a shocking breakdown of how banks target and abuse US Consumers with un-godly annual revenue via Overdraft and NSF Fees:

• $15 billion in NSF/Overdraft fee revenue in 2016.
• Average fee is $35.
• That comes to $41,095,890 in fees earned every day for 365 days.
• That comes to 428,571,428 individual fees at $35 each. 
• That comes to 1,174,168 fees charged every day for 365 days straight.
• Said for many, that comes to $442 per year - at that rate that comes to 34 million consumers each year.
• Our industry serves about 15 million people per year and makes $10 billion in fees and interest.
• Studies show that when applying the same APR% calculation to the typical $100 returned item that a 1600% APR figure is arrived at! (See FISCA).

Why then are the consumer advocates and CFPB so focused on little old us?  Why aren't the Cities in Texas passing ordinances to restrict bank abuse of low to middle end consumers?  Your guess is as good as mine!

What I do know is that our payday, installment, and title loan services in Texas are directly combating the bank revenues by helping consumers avoid those charges by getting a short term loan cover pending items on their bank account.  Consumer choose our services because we are fair, we are fast, and we understand their needs.  We are 100% upfront (ad nauseum) about the costs and terms of our services.  Banks, not so much...and can you believe those numbers????

Here is a link to this information - from USATODAY.com: 

https://www.usatoday.com/story/money/personalfinance/2017/09/26/bank-customers-fork-over-15-billion-fees-2016-cfpb-says/703324001/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Our friend Rob Norcross at CSAT sent over some really good details that he had gathered in response to the OCCC issuing advisory bulletins to licensees on how to remain in compliance while dealing with Harvey aftermath.  I scraped some of those details and organized them below for CAB stakeholders in Texas, and business owners in general that were affected by Harvey.

CAB Consulting and TOFSC have clients and Members in the Coastal region and many were impacted - see below!

"The Texas Office of the Consumer Credit Commissioner issued an advisory bulletin reminding pawn shops of their obligations in statute and rule about safeguarding pledged goods, record retention requirements and relocating to temporary locations (see link in the email below).

There are no similar provisions in Texas Finance Code Chapter 393 for credit access businesses. Sections 83.308 (b) and (c) in Title 7, Part 5 of the Texas Administrative Code addresses the relocation of transactions from one store to the other Section (c). Section (b) contains the notice requirements for customers and to the OCCC. Section (c) also provides for a waiver of the 5 day notice period by the Commissioner in cases of emergency.

If one of your stores is damaged, and you choose to send customers to other nearby stores, please take care to follow these procedures. The provisions of your contracts with your customers will govern issues related to due dates, fee calculations, etc.

The Code prohibits the relocation of a CAB store unless 30 days’ notice is given to the OCCC. There is no waiver provision for an emergency. However, if one of your stores --- that is not near another store --- is damaged, please contact the OCCC if a temporary location is the only reasonable solution to protect your customers. Despite the absence of a waiver provision in the statute, the OCCC has made reasonable accommodations to protect consumers with all types of licensees in the case of emergency.

County Sheriff’s Office

If one of your employees has a question about local hurricane relief activities, law enforcement procedures during/after a hurricane, customers applying for federal assistance, shelter availability, etc., please do not hesitate to contact the local county sheriff’s department. Sheriff’s offices are a critical source of information during disaster recovery efforts. They are trained to navigate the varying levels and overlaps of local, state and federal bureaucracy and often serve as a counties’ switchboard during disaster recovery.

Do not spend hours on the telephone being transferred from FEMA official to FEMA official --- call your local county sheriff’s office. They will (literally) tell you where to go…

 IRS Extends Filing Deadlines for Hurricane Harvey Victims

The Internal Revenue Service is giving Hurricane Harvey victims extra time to file individual and business tax returns and to make certain tax payments in 18 Texas counties because of the “devastating storm.” Businesses and individuals affected by making quarterly estimated tax payments on September 15^th and January 16^th now have until January 31^st to file tax returns and pay taxes that were during those times. 

Vehicle Titling and Registration Requirements Suspended

Texas residents in counties impacted by Hurricane Harvey will not have to worry about vehicle titling and registration requirements for the next 45 days. Governor Greg Abbott suspended certain statutes related to the enforcement of title and registration laws in the 58 counties included in the state’s disaster declaration.

Customer Inquiries to the OCCC

We are working closely with the Office of the Consumer Credit Commissioner to help them process questions received from customers efficiently. Every CAB transaction contract, and most disclosures, include the name, telephone number, and the email address of the OCCC.

Every time a consumer makes a complaint to the OCCC, the agency is required to open a file, contact the consumer, contact the CAB/lender, make a determination about a resolution for the complaint, and notify both parties in writing before closing the file.

However, after natural disasters, the agency typically receives questions from consumers in addition to complaints. If your company would like to designate a point person to address questions the OCCC may receive from your customers, please let me know.

We will give the OCCC the name, telephone number and email address of your designee so the OCCC can refer questions directly to you. We want to give the OCCC every incentive to treat as many inquiries as questions, and not complaints (and staff prefers to open as few complaint files as possible).

Texas Association of Business Hotline

TAB has established a hotline for businesses to connect to the resources they need as rebuilding begins. The hotline number is 512-637-7714. The hotline is available to all businesses. It is not limited to TAB members. You can also sign up to provide services as rebuilding begins in southeast Texas. For more information, visit: www.texbiz.org/2017/08/25/hurricane-harvey/."

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Since Texas cities began passing the infamous and continuously failing Texas Payday Loan City Ordinance there has been a decrease of 1,300 or so licensed locations inside the State.  According to the most recent OCCC licensee totals, this represents a 37% market shrink.  The results have been a shuttering of businesses in Texas, a loss of thousands jobs, a loss of real estate rents, and decrease in property tax revenues.  Rates have increased 12% in Ordinance cities and demand for unsecured short term credit has largely remained the same.  This is a cold hard truth that was laid out in City Council meetings when we were asking for a "No" vote on the Ordinance.  Is an "I told you so" in order here?  

2017 has been a rough year for the Ordinance though, many cities are now bucking the trend and have voted the Ordinance down.  As well, the City of Austin got the double slam-dunk in their simultaneous loss to Speedy Cash and Advance America City Ordinance lawsuits in April.  Those two cases were around a year in the making I wonder if the taxpayers of Austin feel good about the time and expense the City put into an issue that results in a .000153% complaint to loan ratio for Texas residents?  I live in Austin and things are tight budget-wise in this City, despite all the stories you hear about growth it has some problems that should be commanding the attention of city leadership other than the payday industry.   

So here comes the next whammee - I was reading over the OCCC's 1st quarter MSA report for 2017 and it says that 10 of the 2,200 reporting licensees generated 33% of the single payment loan volume, and get this, those 10 licensees were OUT OF STATE!  As far as installment loans go in Texas, 16 OUT OF STATE licensees funded over 37% of the 271,189 installment loan and refinance transactions in the 1st quarter of 2017.  Yes, these are out of state online lending companies who are licensed to do business in Texas but are not within the jurisdiction of any City.  That makes them free to let the market decide and boy did the market ever decide.  On either of the products mentioned - the out of state licensee group was the largest "market" in Texas.  The next biggest markets down were Houston and Dallas but it wasn't even close to the out of state operators.  Check out the report for yourself below. 

Here is a link to the MSA report: http://occc.texas.gov/sites/default/files/uploads/reports/cab-q1-msa-2017.pdf

Imagine if the Payday Loan City ordinance did not force the closure of all of those locations in Texas!  All of that businss would be taking place here in Texas.  Kudos to the online guys who are meeting the need but for obvious reasons we need to work to get those customers back!  I bet the OCCC wishes they had that extra $800,000 per year in licensing revenue.  And how about that $300,000 per year in contributions to the Texas Educational Endowment fund that is now lost?  

The full ugliness of the Payday Loan City Ordinance is now beginning to show in the light.  Please pass this information along to your City Council the next time this issue comes up in your market - we are positioned to deliver the facts to them quickly and efficiently so that they can have the full story and move on to the next issue which will be much more meaningful, no doubt! 

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Over the last several weeks there has been a significant uptick in OCCC examinations of our Credit Access Business friends and clients.  Are you ready for the OCCC to walk in your door?  Chances are if you are a member of TOFSC or if you are a client of CAB Consulting you are in a good position regarding software, APR% calculations, loan contracts, disclosures, and fee schedules.  

That being said it is always good to get refreshers on where the OCCC may be looking the next time you come due for an examination.  If  you are in DFW, East Texas, or Houston I would make sure that you are ready to rock!  

See below for some recent areas of emphasis:

• TILA – is your APR% exact?  Are you off slightly?  Needs to get fixed asap if you are even slightly under-quoting.  Contact your software company ASAP.
• Financial Privacy Act Notices – are the ones in your document package proper?    
• Credit Services Disclosure Statement – regarding the time frame consumer have to ask for information – are you quoting the proper number of days?
• Updated OCCC Contact information – there was a change awhile back on this.  Did you update it? 
• OCCC Notice – must be plain to see and easy to find 1-click from the home page of your website.
• Interest paid or to be paid to lender – this must also be disclosed on the Credit Services Agreement.
• When selling a motor vehicle that has been repossessed - how many bids are you getting?  

 If you would like additional information on these areas feel free to reach out!

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Many times throughout the course of the year CAB operators may change their CAB fee amounts or offer different loan products such as offering multi-payment installment loans, payday loans, or auto title loans.  When changes are made and loan  products are dropped, added, or modified, we have seen the Fee Schedule & Consumer Transaction Information Disclosures be overlooked.  

 
Take the time to ensure that your Consumer Transaction Information Disclosures & Fee Schedule are up to date with all of the products you are offering.  This is on the OCCC Examiner Checklist and Examiners will call you out on this.  Be an "A" student and get it right.

 
Additionally, per Texas Administrative Code 83.5004, if changes are made to your Fee Schedule or Consumer Transaction Information Disclosure, preceded versions must be maintained on site for a period of one year or until the next OCCC examination.

Here is the exact language regarding the retention of amended Fee Schedules & Consumer Transaction Information Disclosures:

For In-Store Transactions:

"In-store fee schedule and notices. The in-store fee schedule and notices required by Texas Finance Code, §393.222(a), and §83.6003(a) of this title must be available for inspection by the OCCC in a conspicuous location visible to the general public. If a licensee amends the in-store fee schedule or notices, it must maintain documentation of the previous versions of the schedule or notices for one year from the date of amendment or until the next examination by OCCC staff, whichever is later. The licensee may maintain the documentation of previous in-store fee schedules and notices at a centralized location other than the licensed location or branch office. In this case, the documentation must be maintained for one year from the date of amendment or until the OCCC's next examination of the centralized location, whichever is later. However, upon the OCCC's request, the licensee must have the ability to promptly obtain or access copies of the complete documentation so that the OCCC can examine it."

For Online Transactions:

"Website and online disclosures. If a licensee maintains a website, it must make the website available to the OCCC for inspection. The website must include a fee schedule to show the licensee's compliance with §83.6003(b) of this title, and applicable consumer disclosures to show the licensee's compliance with §83.6007(f) of this title. If a licensee amends the website's fee schedule, consumer disclosures, or method of accessing the fee schedule or consumer disclosures, the licensee must maintain documentation of the previous version of the website to show compliance with §83.6003(b) of this title and §83.6007(f) of this title. This must include the home page, any pages used in accessing the fee schedule and disclosures, and copies of the previously used fee schedule and disclosures. The licensee must maintain this documentation for one year from the date of amendment or until the next examination by OCCC staff, whichever is later. This paragraph does not require a licensee to maintain previously used pages of the website that were not the home page or pages used in accessing the fee schedule and consumer disclosures. The licensee may maintain the documentation of previous versions of the website at a centralized location other than the licensed location or branch office. In this case, the documentation must be maintained for one year from the date of amendment or until the OCCC's next examination of the centralized location, whichever is later. However, upon the OCCC's request, the licensee must have the ability to promptly obtain or access copies of the complete documentation so that the OCCC can examine it."

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Babin, DiNardo: State should not loosen payday lender regulations. Written by Anna M. Babin and Cardinal Daniel DiNardo. 

Let’s take a minute and dice up this Houston Chronicle piece on Texas Credit Access Businesses.  The newspaper was apparently not satisfied with their role in passing the Houston “Payday Loan Ordinance” which caused a massive amount of closures in the City.  They still take up this reckless cause with Consumer Advocate and Church Groups by giving them a full and open forum to wage the war against the businesses that offer these loans and the people who need them.  The Ordinance raises payment amounts.  How does that help?  And the Chronicle looks the other way when this article’s authors say they do not want to put us out of business? Are they saying that with a straight face or with a wink and a smile? 

So here is something new.  The 180-day limit on loans is something that Rep. Dan Flynn asked the Attorney General to look at, as it can be a limiting rule that restricts credit in a way that is unattractive to consumers.  The article stated that “At the close of the 85th Texas legislative session, an opinion request was submitted to the Attorney General to loosen restrictions in the Texas Finance Code for payday and auto title businesses that would allow for payment of loans to go beyond the 180-day limit that is clearly stated in the law.”  It went on to also say that “If the limit is lifted, payday and auto title lenders will only be required to guarantee that the arrangement of the loan is completed in 180 days, essentially expanding the length of the loan payback period indefinitely.”

Here comes the artful stroke of the brush: “Opening the door to longer-term loans would be a “devastating” blow to the hard-working, lower-income Texans who use these loans to cover basic needs, such as food, shelter and clothing.”  No.  Longer term loans mean more time to pay the loan back and lower payments.  More time to pay back means more flexibility and ability for the average borrower to manage their finances.  Lower payments mean more choices and less defaults.  How exactly is that going to be “devastating?”

And then the qualifying disclaimer: “Our goal is not to put the payday and auto title lending industries out of business, but to ensure that reasonable regulations are in place to protect those most in need of the loans.”  (Ok, riiiiggghhht.  Grownups know better unfortunately.  These people want us out of business.

Here is the deal – Texas Credit Access Businesses have to fight and scrap every single day against people who are working to put us out of business via “thoughtful, meaningful, modest, additional restrictions.” It comes from all angles across the State and media outlets like the Houston Chronicle take up the cause without any word from our side whatsoever.  So, what happens?  41% of Credit Access Businesses in Texas close in a 4-year period.  There were 3,500 in 2013 now there are about 2,100.  With this 180-day rule, it is an issue for us that would help our CABs and customers.

Are the people who wrote and supported this article satisfied with the successful implementation of “thoughtful, meaningful, modest, additional restrictions” in the Payday Loan City Ordinance? No way – they still offer up their opinions on websites and newspapers and enjoy a wide-open forum to instill their false narrative.  These groups will not be satisfied until loans are free and that is no endorsement of the “American Way,” it is more Socialism than anything else.    

This article was written and supported by people who want to shut us down.  And for some more fun, check out the hypocrisy below, the United Way accepted money from Texas Credit Access Businesses, $30,000 in fact.  Yet they are one of the groups we have seen bring on the hate speech at multiple City Ordinance hearings at City Council meetings across the State. I mean they really go for it – they HATE us and want others to think we are the devil reincarnated!

·  Anna Babin, President and CEO of the United Way of Greater Houston. (United Way accepted a $30,000 grant from Texas CABs! We can’t be all that bad, can we?)

·  Cardinal DiNardo is a Cardinal overseeing the Archdiocese of Galveston-Houston.

·  Stephen M. Fraga of Tejas Office Products Inc.

·  Irma Diaz-Gonzalez of E.T.C. Inc.

·  Lynne Liberato, chair of United Way THRIVE. (United Way accepted a $30,000 grant from Texas CABs! We can’t be all that bad, can we?)

·  Y. Ping Sun of Yetter Coleman.

·  Rev. Dr. Steve Wells of South Main Baptist Church.

Here is the link to the press release about the $30,000 grants from Texas Credit Access Businesses to the United Way:

http://www.tfee.texas.gov/TFEE%20Grant%20Award%20Press%20Release.pdf

Here is the link to the Houston Chronicle piece:

http://www.houstonchronicle.com/opinion/outlook/article/Babin-DiNardo-State-should-not-loosen-payday-11209628.php

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

After not being able to find the CFPB monthly complaint report on payday loans last week, I found it Wednesday which was a bit later than normal.  The delay might have been because it is a different kind of report, it is focused on “older” complainants who were 62+ years of age.

This new format report focused on just one month, and discloses that payday loan industry had (23) complaints versus (27) in the prior month.  That is a 28% decrease and is very much in line with all of the other reports that have been released I believe this is #23.

There have been 1,610 CFPB complaints submitted on the payday loan industry since complaints started being taken in November 2013, and (60) “older complaints” have been submitted since November 2013.

Overall, 1,163,000+ total complaints have been submitted so far to the CFPB covering all industries not just ours.  1,610 o, so PDL has a .001387931 complaint ratio!

Here is a link to the CFPB's published report:  

https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201705_cfpb_Monthly_Complaint_Report.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

CAB Consulting has partnered with Star of Texas Financial Solutions in the Austin, Texas area to offer live in-store training sessions to start ups wanting wide and narrow scope guidance on how to get going with their payday, installment, or auto title loan venture.  As well, Payday Boot Camps are often conducted for existing companies wishing to elevate their business to another level by implementing the leading edge operating techniques we demonstrate while in our "live" storefront, or who wish to add additional products or services.  

The two-day sessions are comprised of conversation and instruction in the conference room, as well as "behind the counter" demonstrations of actual transactions in the loan management system with real customers right there in front of you.   

In years past, CAB Consulting has conducted Payday Boot Camps with Tri-House Consulting in California (THANK YOU JER!), and in 2016 we began hosting them in Texas at Star of Texas Financial Solutions in Austin.  This has been an extremely valuable tool for individuals considering an entry into the "payday" industry.  

In the two-day sessions we cover payday loans, installments loans, and auto title loans.  We have hosted groups mostly from States in the U.S. like Texas, Utah, and Nevada.  As well, we have conducted sessions for companies from Canada and South Africa.  

No matter what State or Nation we have been able to deliver expertise on industry basics as well as licensing and regulation.  CAB Consulting clients will be advised on best practices, vendor selection, underwriting, third-party lenders (Texas and Ohio), and much more.  We are a comprehensive consulting business with specialties in multiple states that can deliver 100% of what is needed to start a payday business, to run one, and to make a profit.  

Our industry has experienced a marked resurgence with the recent governmental changes, and CAB Consulting has seen a major uptick in Payday Boot Camp interest.  We are ready to go when you are! 

If you would like to learn more about our Payday Boot Camps, call or email to contact Michael Brown, let's review the program details together, and set a date!  

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Down goes another “payday down city ordinance! On Thursday, April 27th. 2017 the Abilene City Council did right thing and voted "NO" on the so-called “payday loan city ordinance.”

Things do not seem to be going very well for the payday loan city ordinance these days the truth is really starting to get out that it is not even being enforced and the courts have decided (in two separate cases) that it is pre-empted by State Law!

So, let’s talk about how this latest defeat of the payday loan city ordinance went down in Abilene.  First, I must say that I have been to many city council meetings to participate in the payday loan ordinance conversation and I have never seen so many customers turn out to tell a city council to stay out of their personal finance decisions.  Not only did they turn out in droves to the meetings but those who could not attend inundated the city council email in-boxes and phone lines with a strong voice saying - vote “NO” on the ordinance.

Dozens of customers attended both the city council meetings the week of the “NO” vote wearing white t-shirts with "Stop the Ordinance" on it, inside the shape of a big red stop sign.  Supporters of the ordinance had to have been very impressed by the sea of white t-shirts streaming into the council chambers while cameras were rolling.  I think there was a grand total of (1) customer who attended the meetings that supported the ordinance on the other hand.  But, our anti-ordinance customers stood tall and proud when they approached the microphone.  Near (30) anti-ordinance supporters attended in their "Stop the Ordinance" gear, and the total for the two meetings had to have been way above that.

Those payday and auto title loan borrowers in attendance were there to tell the council to vote “NO,” to share their reasons for borrowing, and to vent their frustration that they could be possibly have their financial choices severely damaged by a reckless city ordinance that is a complete failure in 41 other cities in Texas.  In the end, it was the voice of those customers that stood proud and tall to defend themselves that swayed the city council to refuse to pass the ordinance.  I can remember the moment Councilman Shane Price held up the stack of comments he received and printed out from his email.  The vote “NO” stack was inches thick and the stack of comments from those who supported the ordinance was quite light.  In the end, he said that is what mattered.

What an empowering experience for many of these folks to go down to the formal and intimidating City Hall and have their voice heard.  The customers stood strong in the face of Newspaper reporters, TV cameras, and the breathless consumer advocate groups who were there to insult them and suggest they were not intelligent enough to manage their own finances.

I could see how those supporting the ordinance began to place pressure on city council, how they began to burden the council with solving the much larger issue that is at the core of the need for short term small dollar loans.  That is the fact that many Americans simply do not have enough money saved to fall back on in the event of an emergency or other problem in life.  70% of Americans do not have over $1,000 in their bank account – this is the problem.  The supporters of the payday loan ordinance were trying to sell the council and get them to pass an ordinance that would raise payment amounts, close businesses, and do nothing to impact that core issue. 

I was talking with a customer of ours at the meeting and we were joking and wondering if the next ordinance to be rolled out would restrict Whataburger from selling hamburgers with meat in them so the Abilene City Council can end all heart attacks in city limits. Can you imagine this? 

“Hey, Whataburger, yeah, we are not saying we want to put you out of business, but um, yeah we can’t allow you to actually put meat on your burgers anymore, because, you know, it uh, causes heart attacks and you are a terrible person too by the way, but we just want to protect our citizens from your predatory burger making practices with some thoughtful restrictions on fast food hamburgers…oh and burgers can still be sold at real restaurants though, they can still sell hamburgers it is just your kind of hamburgers that we don’t like, yeahhh.” 

It was hilarious, but quite honestly from our standpoint the payday loan ordinance is just as absurd.  The payday loan ordinance is a misguided disaster that is going to continue to unravel.  What the consumer advocate groups and church groups cannot grasp is the fact that the city ordinance does not achieve what they say they want.  It is a gigantic lie that has been perpetrated in 41 cities.  Their (mostly Texas Municipal League and Texas Appleseed) technique to get the ordinances passed has worked in those cities where council members do not do their homework, believe in a lot of regulation, or just want the businesses to go away.  But, their tired argument has grown stale, the final blow appears to be that cities are losing court cases over it, and cities are now voting it down.

Consumer advocates and church groups have their hearts in the right place but are choosing wrong vehicle to help solve what is a much larger problem than the short term small dollar loan industry.  I mean, unless you just did not do the math on how the 25% rule in the ordinance works, how can you ask the city council to approve an ordinance that will raise a borrower's payment amount?  That fact alone should have caused the ordinances to get dumped in the trashcan two minutes after Texas Appleseed comes strolling into a city council person's office.  

Texas Appleseed – did you know payday transactions have hovered at the same level statewide even with a 41% decrease in stores?  Is the ordinance really the ideal vehicle for your cause?  If you want to do some more good, why not help communities apply for for a $30,000 grant from the Texas Educational Endowment (http://occc.texas.gov/consumers/texas-financial-education-endowment-tfee-grant-program) to start financial education in the schools in your town instead?  This fund is completely funded by Credit Access Businesses to the tune of $400,000 per year (roughly). 

The bad news regarding the TFEE is that Texas Appleseed and TML’s efforts resulted in the closure of 1,400+ locations which caused contributions to the TFEE to fall through the floor.  In 2013, the annual contribution amount was more like $700,000 per year.  $300,000 less per year is an insane amount of money that they took away from some groups that could have made a difference for the same people you are trying to help.   

Also, the OCCC has taken a huge hit on licensing revenue that they could have used to hire new examiners to enforce the regulations already in place statewide.  Licensing fees are $600 per year per location, with 1,400 less locations in 2017 versus 2013 that comes to $840,000 less in licensing revenue per year. 

Between the loss in TFEE contributions and the loss of OCCC licensing revenue that adds up to millions of dollars you have caused to evaporate from places that could have helped the consumers you are trying to protect.  

To Churches and other groups besides TML and Texas Appleseed that have chosen to pile onto this issue when the issue comes up at city council meetings - why not just payoff all the loans that people take out with your own money?  Or why not just offer them a loan at 10% APR yourselves?  Stop asking the city fix the problem with a lousy ordinance and fund some loans yourself! 

Long blog and I could go on about this for days, but I am going to wrap this up and save my energy for the next city that wants to look at the payday loan city ordinance.  I will conclude with another thank you to all the people that worked hard in Abilene to get the “NO” vote and again say how much we appreciated the opportunity to tell our side of the story to a city council who really committed to doing their research on this issue. 

If you would like to read about what happened in Abilene here are a couple links to news on the “NO” vote that we were so thankful for:

http://www.reporternews.com/story/news/local/2017/04/25/payday-loan-debate-rages-abilene-city-council/100906592/

http://www.ktxs.com/news/citizens-voice-opinion-about-payday-lending-ordinance/449890488

http://www.bigcountryhomepage.com/news/abilene-city-council-rejects-regulating-payday-loan-businesses/700635585

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Around March 1st a huge blow was dealt to the "Payday Loan Ordinance" in Texas.  The news came out that an Austin court had ruled in favor of Credit Access Businesses in (2) lawsuits related to the ordinance where the City of Austin was sued.  In those cases, the court ruled that the ordinances were "preempted" by State law in several ways. Preemption is something that we as a group have been after for a very long time and we are pleased to see that our industry got its day in court.  The consumer advocate groups who have been pushing the ordinance on cities should be on notice that the truth is starting to get out.  All that has happen is for the cities to enforce the ordinance.  

Many of you may not know the truth, which is that the cities have not been enforcing their ordinances.  This is a deliberate tactic to avoid being sued by Credit Access Businesses. It is also likely that they have no staff or budget to allocate to the endeavor which is worth mentioning as well.  Each city is given a payday loan city ordinance "playbook" that gives them the tactics and methods for enacting the ordinance along with how not to get sued.  If they do not enforce then the payday companies have no legal grounds to sue on because they have not actually been "harmed."  

Well, the City of Austin went beyond its rights and decided to go in and examine and cite two Credit Access Businesses - Advance America and Speedy Cash.  This was the first instance that I know of where a city has enforced and cited a company for not abiding to the ordinance.  So, the first time a city goes in and enforces an ordinance what happens?  They get sued and lose!  This simple scenario is one that should resonate with all cities who have passed an ordinance and with those who are looking at it.  Austin happens to have its act together and enjoys a pretty decent legal budget - if they can lose then anyone can lose.  

Cities should know that there is now a very real legal risk for them - their city councils will be embroiled in lawsuits and will have to consider retaining outside legal counsel to defend themselves.  Council members who know that they have been charged with real responsibilities such as protecting water, investing in infrastructure, maintaining police strength, and providing general safety for their citizens know that they are way outside the lines when telling someone how much money they can borrow and how long they can have to pay it back.  It seems incredibly absurd to me.  For many of you it would be like having the city tell you that you can only have a car that costs $10,000 or less and you must pay it off in (6) payments. Also, you can only have one car!  It is literally the same thing.  What if you have the cash to simply pay $40,000 for a car?  What if you have a spouse that you want to buy a car for?  That example plus a hundred more can be made - and what it does is blow a gaping hole in the practicality of the "Payday Loan City Ordinance."  That is where the whole thing should have stopped years ago.

But now the cold hard truth has landed on the desks of anyone involved in this matter - the court has ruled in favor of Credit Access Businesses.  Cities now need to decide what they are going to do.  They need to be asked publicly, "Are you going to enforce this ordinance?"  If they say "No," then won't that mean they are effectively rolling back the ordinance?  If so, Credit Access Businesses will be able to go back to offering the kinds of credit that consumers in the ordinance cities need and want.  Won't this be an improvement over being told they must drive 15 minutes down the road or get on their smartphone to request a loan from an unlicensed unregulated offshore lender in the Bahamas?  

What if they say "yes, we are going to enforce the ordinance?"  Then Credit Access Businesses will be given the chance to defend themselves like Speedy Cash and Advance America did. What they will simply do is execute a transaction that violates the ordinance, then take that one transaction down to the City and "self-report" the violation.  At that point the city must act and if they do cite the Credit Access Business then they will turn around and sue the City.  What lies ahead will be a court decision that will resemble that of the court orders in Austin.  

CABs are already sufficiently regulated by the Office of Consumer Credit Commissioner.  We have 20-30 page contracts for a $300 loan!  We adhere to a long list of federal and state rules and regulations (all in our contract package) and our complaint percentages on the state and federal levels are fractional on a complaint to loan basis.  I believe in Texas the complaint percentage is .000153% (yes that is three zeroes!).  Our CABs abide by a 90-point CAB Examination checklist that we obtained from the OCCC.  TOFSC members tune in to a weekly conference call every Wednesday where we talk about CFPB and OCCC compliance, share ideas, and try to safeguard our businesses.  We are small business owners banded together to try and survive the ordinances.  In the last (4) years CABs have shrunk from over 3,500 in Texas to about 2,200 that is a 37% decrease in CABs.  That is thousands of jobs lost, thousands of leases broken, a significant loss in tax dollars for cities, and a loss of livelihood for many.  All of that and the demand has not decreased (check OCCC data and consumer reports for online inquires in ordinance cities the data is there if you want to do some homework) although there has been a 37% decrease in stores.  

TOFSC Members are tuned in to this issue and we are ready to fight to save our businesses and to bring the access to credit back to consumers in ordinances cities that is desired.  Cities should prefer that legal, licensed, and regulated businesses serve their citizen’s needs.   C'mon cities - let's bring it back to the CABs and let the cities focus on their big priorities! 

See the links below for the court orders.  For media inquiries - feel free to call Michael Brown at 214-293-8676, or email me at Michael@CreditAccessBusiness.com.  Michael is the President of the Texas Organization of Financial Service Centers ("TOFSC") which is a trade group comprised of small to mid-sized Credit Access Businesses in Texas.  As well, he is President of CAB Consulting, a consulting firm that offers startup, licensing, compliance, and operating guidance to payday businesses in Texas and other states.

https://drive.google.com/open?id=0B2eRFUSSFqhzaXJfa19FbmRuRmc

https://drive.google.com/open?id=0B2eRFUSSFqhzWjUwZkxRaWMwVjQ

Check your work!  Last week my team and I released a blog about Carlos Uresti, a San Antonio based Senator whose offices had been raided by the FBI.  We happened to know that a politician by the name of Uresti in the San Antonio area had also written a bill that would attempt to "cap" all finance charges on Credit Access Business payday, installment, and auto title loans to 25% of the amount borrowed.  Being that I am a rabid defender of our CAB clients, I sprang on the name "Uresti" immediately and assumed he was the same man who had written the bill - which was House Bill 1733.

We made two mistakes on the blog post.  First, State Rep. Tomas Uresti wrote House Bill ("HB") 1733 and Carlos Uresti did not.  Second, we should have known that a Senator would not write a "House Bill" because they are not in the "House," they are in the Senate!    This was one day that our team totally messed up on the details - the blame is on me.   

These errors were sharply pointed out to me and we pulled down the post right away.  We have a lot of people reading our posts and people count on us to relay information.  It is important to make sure we get them right. This oversight is a fresh reminder that the good old fashioned saying "the devil is in the details" is alive and well.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

• The City of Canyon, Texas has enacted a "Payday Loan" ordinance. Per News Channel 10 in Amarillo, the City Council of Canyon enacted the ordinance on Monday of this week. Canyon is located about 18 miles south of Amarillo and has a population of just over 13,000.  The City of Amarillo said many of their lenders left after they enacted the ordinance and this apparently prompted Canyon to follow suit.  Per the Texas Office of Consumer Credit Commissioner ("OCCC"), Canyon only has one active Credit Access Business "CAB") license.  That CAB is "Texas Car Title & Payday Loan."  With only (1) CAB for 13,000 people it can hardly be said that the market is saturated, in most markets there is about (1) CAB for every 5,000 in population.  

• There are roughly (40) cities in Texas with either a City Ordinance or zoning restrictions regarding the "Payday Loan" businesses. Here is a link to the Texas Municipal League's website regarding "City Regulation of Payday and Auto Title Lenders." http://www.tml.org/payday-updates

 Link to article: http://www.newschannel10.com/story/34448364/canyon-approves-to-restrict-payday-lenders

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

• Review your company policy regarding acceptable methods of payment for motor vehicle title loans in Texas as a Credit Access Business. With tax season upon us, there will be an increase in the number of folks paying off loans, especially motor vehicle title loans as the income tax refunds start to pour in over the next few weeks.  For that reason, it is a good time to issue this reminder.

• Many seasoned companies choose to only accept certain forms of payment on the pay-off a title loan prior to releasing that title for certain reasons.  For example, what if a paper check is accepted and that check bounces later?  Your business could have released the title to the customer without being paid!  

• Accepting debit cards without getting the consumer sign the debit card receipt could be viewed as a swipe transaction versus a signature transaction and it could result in “chargeback.” Days later this would occur which would also mean that your business could have released the title without getting paid.

• Allow several days to pass before relinquishing the title so that you are assured the payment has successfully cleared. (If you accept these payment types).

• There is no right or wrong way of doing this. We cannot hold a consumer’s title for an extended period. (10) Days is what we have seen as the norm for an acceptable amount of time of holding on to the vehicle title.  In some cases, where if a check is used, the title will be released after the check clears. This normally takes 3 to 5 business days. Other cases involving a debit card, the store-front requires the consumer to do a signature transaction where the consumer signs the receipt as they would at a restaurant. Of course,

• Cash is always ideal for Credit Access Businesses in these situations, but not everyone uses it and consumers may not prefer it when amounts are larger.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

• HB 60, Introduced by Romero Jr: Requiring a Credit Access Business to verify the vehicle identification number used to obtain a motor vehicle.

• HB 197, Introduced by Bernal: Relating to the contracts and other documents issued by a Credit Access Business (requiring to have English & Spanish). Also, to read the contract in its entirety to consumers who cannot read.

• HB 877, Introduced by Chris Turner: Relating to certain telemarketing calls by a Credit Access Business. Prevents a CAB or an employee of a CAB to make telemarketing calls to consumers who are on the Texas No Call List. 

• HB 1134, Introduced by Republican Tom Craddick wishes to add that City Ordinances should not be pre-empted and that Cities should be allowed to regulate State Licensed Business’s, such as Credit Access Business’s. In fact, the language used in Craddick’s proposed bill goes on to state that “this chapter does not preempt a municipal ordinance regulated a CAB or any form of an extension of consumer credit that a CAB is authorized to obtain for a consumer or assist a consumer in obtaining. If a municipal ordinance described by Subsection (a) conflicts with a provision of this chapter regulating a CAB, the more stringent regulation controls to the extent of the conflict”

• First, we must remind you that Tom Craddick proposed similar bills in the last session two years ago, in 2015.

• How this can affect us. Right now, only a couple of cities are enforcing the ordinance or at a minimum sending city employees out to ensure that CAB’s are registered. If this rule were to go into effect, the city would not need to enforce the Ordinance, it will be under a State Law, allowing OCCC examiners to enforce City Ordinance Regulations, which they do not currently do right now.

• SB 560, Introduced by Hannock. This bill is to empower the OCCC to enforce and apply penalties for those CAB’s who charge a surcharge on those paying via debit or credit card. To the best of our knowledge, none of our members are doing this anyways. If you charge someone a fee for paying with their debit or credit card, you are already out of compliance as this a state-wide rule that is currently in existence, one which carries some hefty penalties by the Attorney General’s office. This Bill by Hannock applies a $500.00 fine for each infraction.

• HB 975, Introduced by Giddings, relating to the threat or pursuit of criminal charges against a consumer in association with certain extensions of consumer credit and providing a civil penalty for the Credit Access Business. 

• This bill is interesting as it states that a CAB cannot file a criminal charge against a consumer, unless the CAB has “extrinsic evidence sufficient to prove that the consumer committed an offense”. If a CAB or anyone for the matter could determine what sufficient evidence of a crime is, then that would essentially eliminate District Attorneys as they are the officials in the capacity to make that determination of whether a case should be brought against someone or not. This one may not last too long.

• HB 741, Introduced by Bernal: Relating to the affordability of extension of consumer credit. This bill is extremely vague as well. It states that a CSO must verify a consumer’s income, and establish that the income verified to be used demonstrates that a consumer can reasonably repay the loan in cash.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

New Technical Rules for 2017 you should be aware of.  Did you know there are new rules related to the application for new licenses, transferring a license, and criminal history of CAB owners?  Much of this was covered during CAB Consulting’s “CAB II” project that many clients and members took advantage of. 

*The language for rules and transfers removes the part mentioning that you need to wait on the OCCC's approval to operate a CAB while the license is being transferred. The transformer assumes all responsibility of the license until the license has been transferred to the transferee. 

**Criminal History can affect license holders. This affects anyone with a State license from a concealed handgun license to a Credit Access Business license. In the eyes of Texas, it is a privilege to maintain a Texas license, and therefore license holders must be law abiding residents.  

Here are several areas of infraction that could compromise your CAB:

Theft, assault, any offense that involves misrepresentation, deceptive practices or making false or misleading statements. 

Any offense that involves breach of trust or other fiduciary duty.

Any criminal violation of a statute governing credit transactions or debt collection. 

Failure to file a government report, filing a false report or tampering with a government record. 

Here is a link to the rules: http://occc.texas.gov/sites/default/files/uploads/pub/rules/cab-adoption-fc-010517.pdf 

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

New bill: HB 877, from Chris Turner (Democrat out of Tarrant County, Represents Grand Prairie & portions of Arlington).

Caption: Relating to prohibiting certain telemarketing calls by a credit access business.

A credit access business or a representative of a credit access business may not make a telemarketing call, as defined by Section 304.002, Business & Commerce Code, to a consumer whose name and telephone number are on the Texas no-call list maintained under Subchapter B, Chapter 304, Business & Commerce Code.  

The full text of the proposed bill mentions that you would be able to contact consumers with whom you have had done business with in the past, so long as it has not been more than 1 year since the last transaction.

Comments:  Our clients and Members to not typically "telemarket" or use outside telemarketing firms.  We are not aware of many CABs who do this but would be interested to see how "telemarketing" is defined.  Stands to reason that if someone has asked not to be telemarketed to that they are not telemarketed to.  Not sure why it is worth the effort to put this bill out.

Link: http://www.capitol.state.tx.us/Search/DocViewer.aspx?ID=85RHB008771B&QueryText=%22credit+access%22&DocType=B

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

The 85th Texas Legislative Session starts on Tuesday, January 10, 2017.  At this point, (3) bills have been posted ahead of the session.  See below for information on the bills as well as a few comments.  

Ramon Romero (D): HB 60

Relating to requiring a credit access business to verify the vehicle identification number used to obtain a motor vehicle title loan.  Before obtaining a title loan for a consumer, to physically inspect the vehicle used as collateral, photograph the vehicle identification number, and verify that the number matches the number on the title provided by the consumer. Requires the CAB to retain the photograph until the second anniversary of the date the extension of credit is made.

Comments:  This really is something that any decent operator will do anyway. Not sure why additional regulation is needed here.  CABs have a very long list of regulations they abide by so why is Mr. Romero wanting to add more?  

Matt Schaefer (R): HB 153

Relating to the authority of a municipality to regulate occupations.  Prohibits a municipality from adopting any ordinance that: (1) establishes additional, more stringent licensing requirements for an occupation that requires an occupational license issued by a state licensing authority, or (2) requires a person to obtain an occupational license issued by the municipality. Provides that any ordinance violating this prohibition is void.

Comments:  Anything that will void the city ordinances related to payday, installment, and auto title loans makes sense.  The city ordinances have caused over 1,500 businesses to close and have caused thousands of people to lose their jobs who worked at those stores.  With the increased cost of doing business that resulted from trying to survive the ordinances, CAB owners had no choice but to increase rates and that has hurt consumers - it was that or go out of business.

Diego Bernal (D): HB 197

Relating to contracts and other documents issued by credit access businesses.   Requires the contract and other documents provided by a CAB to be: (1) provided before signing written in both English and Spanish, (2) written in plain language, and (3) printed in an easily readable font and type size. Requires the Finance Commission to adopt rules implementing this provision. Requires the CAB disclosure and notice to be available in both English and Spanish at each CAB business location.

Comments:  CAB consumer loan document packages are typically 25 pages - if you have to create document package in both languages that will be 50+ pages of documents, tons of ink, paper, and toner.  That will mean an increase in costs and slower processing times which will be a major concern for business owners and an inconvenience for the customer, and likely even higher rates.   Who decides what "plain" language is? Will all the current document packages have to be re-written?  What is "reasonable" font size?  I know 12 point font is required in the TILA disclosures but due to all the regulations and other disclosures that are required to be provided, CABs (and other entities like banks) need to shrink font as small as possible so the documents aren't too long.  (remember 25 pages+ to start).  If you go 12 point font on a document that is mostly 8 point font it is going to cause the document to double in size.  50 pages in English, 50 pages in Spanish!  And, the CAB has to make copies of the signed loan documents for their files so that becomes 200 pages!  All that for a $300 loan?  If this one passes we should all get into the paper, ink, and toner business!

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

In an earlier blog the CAB license renewal deadline was addressed as it is coming on January 31st.  It is very much worth mentioning that each year when the CABs across Texas pay the renewal fee of $800 per location, that $200 of that goes to the Texas Financial Education Endowment Fund (http://www.tfee.texas.gov/).  It appears that 2,125 CAB licenses will be renewed this year and that comes to $425,000 in contributions to the fund!  

In years past there have been as many as 3,500 CABs so that would have meant that $700,000 was contributed for that given year.  CABs have been contributing to the fund since the CAB law went into effect in 2012 so 2017 will be the 6th year.  CAB renewals fluctuate but it is safe to say that $2-$3 million has been put in to this fund by Texas Credit Access Businesses.  

"The Texas Legislature established the Texas Financial Education Endowment (TFEE) to support statewide financial capability and consumer credit building activities and programs. The endowment is funded through assessments on each credit access businesses and is administered by the Finance Commission of Texas."

This program is 100% funded by the licensed CAB operators in Texas.  As a group we should all be pleased to make contributions towards the kinds of programs that have been given grants through the fund. 

One bit of irony worth mentioning is that many of the programs who have received money from CABs are located in cities where ordinances were passed.  Goodwill Industries has been strongly opposed to our industry however they gladly received $32,000 from us in Austin!  I have personally seen them testify at City Council meetings in support of the ordinance.  Their testimony is typical in that had a very narrow, negative, and uninformed set of talking points.  Not only does Goodwill support the city ordinances but they join the argument that CABs take advantage of low income citizens.  Well in the case of the $32,000 grant, they took money money from low income citizens.  And, the participated in a movement that caused businesses to close (about 1,300 across Texas), people to lose jobs (2 per store would be 2,600 jobs gone), and after all of that the rates in ordinance cities went up 12% because of burdensome regulation.  Less competition hurts the consumer, once again...

For more information on market changes related to ordinances please go to the OCCC's website and review the MSA reports for the last several years: http://occc.texas.gov/publications/activity-reports#cab

As for the good news - Texas Credit Access Businesses should get more positive attention for the impact they have on programs that do good for others, see below for some of the grant recipients: 

K-12 Financial Education & Capability:

Texas Council on Economic Education - $32,000.00

Financial Coaching:

Family Pathfinders Tarrant County - $32,000.00

Community Development Corporation of Brownsville - $32,000.00

Adult Financial Education & Capability:

Goodwill Industries of Central Texas, Inc., Austin – $32,000.00
 

Easter Seals of Greater Houston, Houston – $32,000.00
 

Texas State Affordable Housing Corporation, Statewide – $32,000.00
 

El Paso Credit Union, Inc., El Paso – $25,000.00
 

Family Service Association of San Antonio, Inc., San Antonio - $32,000.00

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Credit Access Business ("CAB") License renewals with the Texas Office of Consumer Credit Commissioner ("OCCC") are due by no later than December 31st.

You absolutely positively cannot miss this deadline. If you do, you will likely lose your license and have to re-apply for a new one. That is not the biggest problem - if you do not renew then you do not have a license, you have an expired license.  And, during the time that you operate with an expired license you could be forced to return all of the fees you collected.  

Use OCCC's online portal called "Alecs" to do the renewals.  It takes a matter of minutes to login and do it!

Here is the link to the website:  https://alecs.occc.texas.gov/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Although we are all hopeful the proposed CFPB rule will unravel in the near future, the CFPB action against Moneytree is a good reminder that we can at any time be examined by the CFPB in the same way that the OCCC can show up at our stores at any time.  

Specific to this particular action was collections and advertising.  The information on www.CFPB.gov stated that there were "deceptive online advertisements and collections letters." And that "the company also made unauthorized electronic transfers from consumers’ bank accounts." 

CFPB has ordered the company to cease its illegal conduct, provide $255,000 in refunds to consumers, and pay a civil penalty of $250,000.

What did the CFPB say Moneytree did wrong?

§  "Used deceptive online ads: In early 2015, Moneytree ran advertisements online offering to cash consumers’ tax refund checks for “1.99.” The actual fee for the service was 1.99 percent of the amount of the check cashed, rather than $1.99, as the company’s advertisements implied. Consumers were required to visit one of Moneytree’s physical branches to take advantage of the advertisement’s offer, which appeared online tens of thousands of times."

§  "Deceptively told consumers their vehicles could be repossessed: From late 2014 through early 2015, Moneytree mailed letters to hundreds of consumers indicating that their vehicles could be repossessed if they did not make past-due payments on their installment loans. But none of these consumers had loans secured by their vehicles, and Moneytree had no right or ability to repossess them."

§  "Withdrew money from consumers’ accounts without authorization: Moneytree failed, in over 700 instances, to obtain pre-authorization from consumers for withdrawals from their bank accounts, in violation of federal law."

What are the take-aways?

Advertising:  As an owner of your business ALWAYS read the final proof of all advertising and distribute the policy on a campaign in writing to your team, communicate the policy verbally as well so that emphasis can be made in areas where necessary.   Think critically about how a statement can be interpreted on your advertising materials, ask yourself "If a regulator who wants me out of business reviews this how else could this advertising copy be interpreted to be accurate or to be misleading?" 

Collections:   I am not sure if this was an error or if it was intentional that Moneytree sent letters to debtors saying they were going to repossess their vehicles if they did not pay their unsecured loan off.  I am going to assume that this was an error I really have not met anyone in the last (5) years of consulting that would do that kind of thing intentionally.  As an owner of your business make sure to review and approve collections letters as they go out.  Collections (and in particular repossession) is a risk laden mine field on the regulatory front.  There are too many instances of fines occurring due to internal error in Collections not to make sure you keep an extra close eye on this crucial part of every business.

ACH or Debit Card authorizations: Everyone must get an ACH or debit authorization for every transaction.  Only debit the amount(s) due per the agreement and payment amounts must match what is on the payment schedule.  Most know this, but often times the employees get bogged down or too busy and these errors occur.  An automated e-sign process helps this as signature lines are less likely to get missed.  If you do not have the authorization signed, it could be deemed "illegal."

Link to story: http://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-moneytree-deceptive-advertising-and-collection-practices/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Did you know?

• 7 in 10 Americans have less than $1,000 in savings in case of emergency.
• 34% of Americans have zero savings. 
• 5% of Americans have relied on payday loans or similar services.

Customer Demographics – per a Georgetown University McDonough School of Business study:

• Majority earn between $25,000 and $50,000.
• 90 % have a high school diploma or better, 54 % have some college or degree.
• 53 % are under 45 years old (only 9 % are 65 or older).
• Majority of customers are married and 63 % have children in household
• 32 % own homes, 54 % have credit cards, 100 % have steady incomes, 100 % have checking accounts.

For more information, go to:  http://cfsaa.com/about-the-payday-advance-industry/customer-demographics.aspx

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

The Texas Organization of Financial Service Centers (“TOFSC”) is:

An Industry Trade Association mainly comprised of small and mid-size business owners in Texas who offer short-term, small-dollar loan services.  You may be more familiar with our industry and it’s more commonly referred to name “The Payday Loan Industry.”  In fact, that term is loosely (not really accurate) used to describe many kinds of financial services that exist in the U.S. market, such as Check Cashing, Auto Title, Payday, and Installment Loans.  Titles aside, it is most important to understand that our Association members are in business to provide a needed service to Texas citizens.

The “Payday Loan” in Texas:

Members of TOFSC are small business owners in towns spanning across the State of Texas.  We are licensed “Credit Access Businesses” and are legal business owners dedicated to maintaining the highest level of compliance with the Regulations of the Texas Office of Consumer Credit Commissioner.  Many of our Members sit across the desk from our customers and providing loan services them directly.  Our customers value us and we treat them fairly.  In fact, in 2015 over 1.6 million Texas consumers used our services.  Complaint averages each of the last two years have been under 500 per year.  That is a per loan customer complaint % of .0003125%.        

Banks and Other Industries causing larger scale problems:

Banks earn a reported $30+ billion per year in Overdraft and NSF charges from the same customers the Payday Industry serves.  The Payday Industry earns less than $9 billion per year industry-wide.  Even though we are a much smaller industry in terms of revenue, banks have gotten a pass while the Payday Industry has taken the full brunt of the media and Consumer Advocate onslaught.  And, when the same APR% calculation methods are applied to bank NSF and Overdraft charges they can be as high as 1,600% which is 2-3 times greater than many Payday Industry products.  Many Consumer Advocates suggest the banks should be the saviors of what they call the “payday loan problem,” but the truth is the amount of money the banks earn from our shared customers should be more heavily scrutinized.

The Annual % Rate (“A.P.R.”) Issue:

The citation of the triple digit A.P.R. %’s that many of our products carry is the easiest and most frequent argument used against us by the media and Consumer Advocates.   It is very true that our industry’s products can be expensive for consumers - this fact is always disclosed to customers before and throughout the loan process.  However, opponents of our industry rarely if ever discuss the extremely high defaults and fraud %’s that must be absorbed to maintain profitability.  After subtracting bad debt, rent, payroll, and other basic operating expenses, our small business owners are focused on simply making a profit no different than every business in Texas.

Significant regulations are already in place despite suggestions otherwise by the News Media: 

The States have decades of experience in dealing with our industry and already have many helpful regulations in place.  In Texas, the Office of Consumer Credit Commissioner conducts examinations continually, where each licensed business is taken through an 80+ point examination checklist.  Consumer loan documents used in Texas include compliance with a long list of key Federal and State regulations such as: Truth in Lending Act, Military Lending Act, Fair Debt Collections Practices Act, Unfair and Deceptive Trade Practices Act, and Fair Credit Reporting Act.  Arbitration and dispute resolution is offered, Privacy Policies are in place, and customers are given the “Right to Rescind” for up to three days.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

There is some funny money making the rounds in Abilene and the East Texas region.  There were two incidents recently that were uncovered.  The way money usually works is that it will circulate in a region so I want to make sure everyone is upping the amount of attention put towards identifying counterfeit bills.  

Incident #1: Fake 'movie' money used at movie theater and other Abilene businesses (KTXS News).

Abilene police are investigating a case they hope will have a Hollywood ending.  APD’s Fraud Unit says suspects have made purchases at more than 20 local businesses using counterfeit bills made specifically for use in the movies. Ironically, one of the places that accepted the funny money was a movie theater.

Link: http://www.ktxs.com/news/fake-money-used-as-movie-prop-circulating-in-abilene/167827285

Incident #2:  Movie money found in East Texas.  (Longview Journal)

There have been additional news articles on the use of the counterfeit “movie” money in East Texas as well.  The Longview Journal posted an article that the “movie” money has been reported in other parts of East Texas such as: Lufkin, Diboll, and Jasper.

Link: https://www.news-journal.com/news/2016/aug/29/fake-movie-money-hits-et/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

• The average Payday Loan was $439 for single pay transactions and $557 for installment loan transactions.
• The average Title Loan was $1,230 for single pay transactions and $1,008 for installment loan transactions.
• The average CAB fee for Payday Loans was about $24 dollars per $100 borrowed on single payment transactions and $166 per $100 borrowed on installment transactions (which is about $14 per $100 every 14 days).
• The average CAB fee for Title Loan was $17.13 per $100 borrowed on single pay transactions and $88 per $100 borrowed on installment loan transactions (which is about $17 dollars per 30 days).

Dan Micawber at AF$PA / Payday Brokers has announced a Consumer Alert (and operator alert) regarding for a new round of Fake Debt Collectors circulating in our industry.  If you are a consumer who received a call from a debt collector that says you owe money to a “payday loan company” but will not tell you the name of the company or claims they are a member of the "Alternative Financial Service Providers Association" ("AF$PA") - it is a scam. 

All Debt Collections Agencies who comply with the Fair Debt Collection Practices Act "FDCPA" must follow a very long list of rules regarding how contact can be made with borrowers.  One very specific issue with the FDCPA that is not being followed by these current scammers is that they must be able to "verify the debt."  If they will not say who the debt is from it is not likely they have a contract to collect on.  A collection agency must disclose the name of the company that the debtor owes money to.  If they refuse - it is a scam.  If they say they are sending the sheriff or police - it is a scam.  If they say they can have you locked up - it is a scam.

Our CAB clients and members should be concerned about this as well.  One of the biggest sources of complaints at the OCCC is this kind of problem.  As compliant CAB's we often times are lumped in with unsavory characters out there who google their way into becoming debt collection scam artists.  A bad actor can simply google search for payday loan and run into the AF$PA website or maybe even grab larger CAB's name off the internet and start calling people saying they owe them money.  It is only a matter of time before they trick an innocent consumer into running down to the corner store and loading some money onto a prepaid card that sends funds directly to them in an Indian call center.

I have helped consumers on this issue and even had one conference me in with the scam collections agent.  I was able to shut them down in less than 30 seconds and enjoyed it immensely.  Most TOFSC members have the TOFSC Comment / Complaint line posted in their store - if you have any customers telling you they are encountering this problem please have them contact me at 214-293-8676 and we will get them going in the right direction.   

Renewal dates are as follows:  Renewal period starts November 15th and December 1^st renewals are due. Any licenses that are not renewed by midnight of December 31^st will expire.

Do not forget this it is a nightmare if you do, you will have to go through the license process again.  We have seen this happen to clients and members before and the OCCC is not as forgiving on this topic as they may be in other areas.

Here is a link to the OCCC website for more information: http://occc.texas.gov/industry/cabs/licensing-forms (look at right margin of screen). 

All of the renewal process can be handled by the OCCC's online portal called "Alecs" - if you have not created an account for your license - go here to learn how: http://occc.texas.gov/sites/default/files/uploads/misc/setting-up-account.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

As many of you may know, in October 2016 we all began operating by new rules in regards to how we must treat "Military" applicants and their dependents.  We now need to verify what has been told to us by the applicant regarding their status on this topic.  The burden is on us as operators to confirm the status versus the past where the applicant simply checked the "yes" or "no" boxes on the application form or on the consumer loan documents.  

You can go directly to the Department of Defense's MLA website to perform the checks or if you employ Credit Reporting Agencies like Factor Trust or Microbilt they have the checks integrated.  Here's a link to the MLA website: https://mla.dmdc.osd.mil/single_record.xhtml

My very close personal friend and true Southern Gentleman Max Wood at Borrow Smart Alabama put out the following thought provoking questions on this Military Lending Act topic and I wanted to pass those along to our site visitors.  Please review and due your part to make sure your operation is as strong as it can be on this subject!


1. Will will be violating SCRA rules if we don't rewrite an existing customer who on paper said they were not a covered borrower but when accessing the DOD we discover they are?


2. On a busy day, clerks want to run DOD reports in the morning for all customers due that day so they won't have to slow down the loan making process during the day. Is this acceptable or do they have to run reports only when customer is standing in front of them?


3. How will we determine if someone is the dependent of an active member in the military or reserves without having that family members information?


4. Will we need to continue to check the DOD website after the first advance of someone is permanently disabled, or is of social security age?


5. Will the following provide safe harbor: MLA website, "big three" credit bureau, SCRA website, retail credit report ostensibly re-reporting from "big three"?


6. If a product APR is too high for Military but was obtained pre-military, may it be re-financed with or without additional credit (not a payday loan)?


7. Does the database search cover all exposure for noncompliance with MLA?  In other words if the database search is performed and comes back clear does that cover any possible violation?


8. What exposure do we have for spouses, family members for this.  What are some of the questions we need to ask to determine all related persons to the applicant are covered?


9.  If the website is down when the search is performed is it enough to document that and have them sign a disclaimer stating that they are not an active member of the military.  Would it be a good idea in this case to run a search after the site is up and document the file?

10. My understanding of this is basically when a new contract is executed a search has to be performed.  What are the exceptions to this?

11.  For an installment  loan renewal does a new search have to be performed when the loan is renewed?

12. For a flex loan (open line of credit) do we need a search when the customer takes out an advance on their existing line?

13. For a Tennessee Title Pledge loan do we have to do the search prior to sending a renewal letter for an extension?

14. Is there any reason to take existing Military Act questions off of the existing contracts?

15.  Is there anything that needs to be done re pre-10/3 loans (e.g., scrub against the database)?

16. Do MLA restrictions apply to "mere" loan extensions?

17. In AL a title pawn is actually a traditional pawn transaction (title is held as merchandise for pawn) - unlike most other states.  At the end of 30 days the customer may pay the fee (interest) and extend for another 30 days.  There are a couple of ways people do this.

          a) After the initial transaction and contract each subsequent extension is done by accepting the payment and extending for another 30 days.  If the loan amount increases the old contract is paid off and a new contract is generated that reflects the new amount.  This transaction type would require a check of the database, I am sure.  BUT, if there are no changes or principal is paid down and only a receipt is printed, is a check of the database required?  To further complicate the situation some operators use a different pawn number for each extension and others do not change the number.  Would a check of the database be required under either or both scenarios?

           b) A new contract is generated at each extension.  My guess is that a database check will be required.

18. If a lender is in compliance with the new MLA rule including the database check, is there a problem with a lender continuing to obtain a signed military form (the model form) for our files in addition to the new required database check confirmation certificate ID number?

19. Are there any prohibitions to refusing to lend to a covered borrower?

20.  A new customer divorced her husband who was active duty.  She received no spousal support in the divorce yet her MLA search lists her as a dependent.  The database had not been updated to reflect her as no longer deriving income from her now ex-husband.  Is it acceptable to provide a loan to the customer as long as income and divorce documentation is provided?

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

We are at a point in the year when many Credit Access Business owners who offer payday, installment, or title loans to Texas consumers increase their marketing and advertising efforts in hopes of serving those needing an extra financial cushion to get through the Holidays.  It is important that readers know there are some restrictions around off-site advertising. 

Per Texas Finance Code Chapter 393, a Credit Access Business may not advertise on the premises of a nursing facility, assisted living facility, group home, or intermediate care facility for persons with mental retardation, or other similar facility subject by regulation of the Aging & Disability Services.

It is my opinion that many of our clients and members would not intentionally advertise or market to these consumer groups.  But, we should all be aware that employees who are out and about hanging door hangers, passing out flyers, etc may not think about it while they are on the premises of such facilities.  So, just head's up and let's all make sure we are thinking a few layers deep while we are working through a high demand higher action period of our business cycle.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

(CFSA) anticipates that more than one million concerned Americans will have spoken out against the CFPB's “Payday Loan” rule.

The CFPB now faces a massive backlog in its comment portal. Presently, only 158,259 (as of 10/26 the totals were 144,140 so that’s 14,119 in three weeks) comments are publicly accessible on the Bureau's Regulations.gov comment portal.

According to Director Cordray's estimates at the time, there was a backlog of at least 855,860 comments that the CFPB must account for, that leaves about 697,601 to go.  At 4,706 per week that is 148 weeks or almost 3 years!  They have upped the pace from last we reported.  

Link to the “comment watch:” http://www.cfpbcommentwatch.com/

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Dealing with Texas DMV office who refuse to allow Credit Access Businesses to add a lien to a vehicle (for a Title Loan)  when the registered owner of the vehicle has outstanding warrants, tickets, toll fees and or recent child support payments on file as delinquent can be a problem.  We have seen this in a few counties recently - it appears to be referred to as a "Scoff Law".

The only fix we have seen that works is to simply process the lien in a different county. There are 254 counties in Texas, and each tend to do their own thing! 

Another instance that has come up with some title loan borrowers is when one consumer who has a title loan with a CAB sells their motor vehicle to another consumer without the buyer getting the title. The buyer in these cases can either be tricked into doing this or may just be careless / unaware.

For the CAB in this case, because they actually have the title and the lien, they "own" the vehicle and would be forced to repossess if the seller stops paying on the loan (this would be what triggers awareness of any issue other than if the buyer comes back later and asks for the title).  

If you find yourself in this predicament as a buyer or a CAB, follow the law and rely on other professionals to consult you on the best course of action.  For CABs (as always) follow the proper disposition methods in compliance with Texas Business and Commerce Code Chapter 9.  

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

I always look forward to the new CFPB complaint reports that come out each month around the 25^th.  Why?  Well as you will see if you follow them as well, the “Payday Loan” industry (this is the umbrella term used in these reports to refer to companies who offer payday loans, installment loans, title loans, cash advances, etc) has yet another double digit decrease in complaint volume versus the same 3-month period (July-August-September) last year.  This month showed a 21% decrease.

It is unfortunate that there were complaints, and I can tell you that our clients would be extremely concerned in the event any complaint was filed by their customer.  They would respond promptly and work to communicate with the customer to clarify any misunderstandings and work out a resolution.  Zero complaints – that is the goal.

As is the case with the other monthly reports – we are always the industry with the largest decrease.  There are 10 other industry categories and we are the only one with these giant drops in customer complaints, consistently.  Student loans are #1 and our bank friends are at #2 with a 37% increase.  

I am aware that consumer advocates and others who are not so friendly to the industry visit this website.  I am wondering if they also view the CFPB complaints each month.  The story being told here is that consumers complain less about our services than any CFPB category.  I would recommend you shift your focus to the biggest offenders if you are currently hyper-focused on shutting down the “payday loan” industry. 

After all the work you have done to work up complaints you have only mustered a double digit decrease in complaint volume, you may be able to do better somewhere else.  I think the banks are where you should go – they target our customers with abusive overdraft charges and NSF fees with astronomical effective APR’s (think 1,600.00%), and bring in about 4 times the amount of annual revenue that our industry does. 

Here is the link to this month’s report (see page 4): 

http://s3.amazonaws.com/files.consumerfinance.gov/f/documents/102016_cfpb_Monthly_Complaint_Report.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

CFPB’s 16th Monthly Complaint Report released on October 25, 2016. 

I always look forward to the new CFPB complaint reports that come out each month around the 25^th.  Why?  Well as you will see if you follow them as well, the “Payday Loan” industry (this is the umbrella term used in these reports to refer to companies who offer payday loans, installment loans, title loans, cash advances, etc) has yet another double digit decrease in complaint volume versus the same 3-month period (July-August-September) last year.  This month showed a 21% decrease.

It is unfortunate that there were complaints, and I can tell you that our clients would be extremely concerned in the event any complaint was filed by their customer.  They would respond promptly and work to communicate with the customer to clarify any misunderstandings and work out a resolution.  Zero complaints – that is the goal.

As is the case with the other monthly reports – we are always the industry with the largest decrease.  There are 10 other industry categories and we are the only one with these giant drops in customer complaints, consistently.  Student loans are #1 and our bank friends are at #2 with a 37% increase.  

I am aware that consumer advocates and others who are not so friendly to the industry visit this website.  I am wondering if they also view the CFPB complaints each month.  The story being told here is that consumers complain less about our services than any CFPB category.  I would recommend you shift your focus to the biggest offenders if you are currently hyper-focused on shutting down the “payday loan” industry. 

After all the work you have done to work up complaints you have only mustered a double digit decrease in complaint volume, you may be able to do better somewhere else.  I think the banks are where you should go – they target our customers with abusive overdraft charges and NSF fees with astronomical effective APR’s (think 1,600.00%), and bring in about 4 times the amount of annual revenue that our industry does. 

Here is the link to this month’s report (see page 4): 

http://s3.amazonaws.com/files.consumerfinance.gov/f/documents/102016_cfpb_Monthly_Complaint_Report.pdf

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Howdy folks – I saw this really great article in the Houston Chronicle titled “FDIC: Texas leads the country in 'unbanked' households." This was another reminder that we are in one heck of a strong market.  Yep, everything is bigger in Texas! 

This article tells me many things, but my first instinct is that it likely banks have made it so unattractive to work with them in Texas that many people ("unbanked" or "under banked") simply prefer to go another route versus the traditional bank.  And, banks actually turn away many of the customers we serve for what I think are unfair reasons.  Many of our clients are very pleased to work with these customers and would like to ask for their business.  Whether the clients offer payday loans, cash advances, title loans, installment loans, or check cashing...it is quite likely they can suit the needs of the consumer.  Banks are lazy; customers in our industry typically need some above the norm assistance while carrying higher amounts of risk. Our clients understand this and will do the work with the customers seven days a week, in-store, online, via phone, email, or text!

Despite the fact that banks are being shunned for their unfair treatment (ahem, Wells Fargo) of U.S. consumers, and despite the fact that more consumers are saying "no thanks" to the local bank branch, the banks still make 4-5 times more revenue on overdraft / NSF charges than the entire "payday loan" industry makes in annual revenue last I checked.  Perhaps the CFPB should spend less time on our industry and more on the banks!    

Using 2015 data, the FDIC measured "economic inclusion," which is the term they use to label families who use mainstream financial institutions.

The study estimates how many households are unbanked, or don't have bank accounts, and how many are under banked, or may periodically seek financial help from services such as title loans, payday loans and pawn shops despite having bank accounts.

Here are some statistics cited in the article:

9.4 percent of households, or about 967,000, were unbanked in 2015.

23.7 percent of Texas households were under banked.

Income of less than $15,000 per year: 25.6 percent unbanked, 29.5 percent under banked.

No high school diploma: 28.8 percent unbanked, 26.7 percent under banked.

Ages 25-34: 13.8 percent unbanked, 27.1 percent under banked.

Ages 35-44: 12.8 percent unbanked, 27.7 percent under banked.

About 16 percent of African American households were unbanked and 30 percent under banked.

About 18 percent of Hispanic households were unbanked, with 30 percent under banked.

In Texas, unbanked households logged the lowest savings rates at 17.7 percent.

Savings rates rose to 49.5 percent for under banked households and 59.5 percent for those considered "fully banked."

What should business owners in our industry be thinking as they read the article?  What are the behaviors/traits of our customers?  How do we mold our services so they are in line with the behaviors/traits?  What services should we add and evolve into? 

http://www.chron.com/business/retail/article/FDIC-Texas-leads-the-country-in-unbanked-and-10049320.php

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.