U.S. Federal Lawmakers Introduce Payday Loan Bill

Jer Trihouse Payday Loan ConsultingThis federal payday loan bill, by Reps. Blaine Luetkemeyer (R., Mo.) and Joe Baca (D., Calif.) is a revision of an earlier bill. It includes changes to reduce criticism that this new piece of legislation is an attempt to circumvent CFPB.

If carried, this new federal charter would carry some specific rules, including prohibitions against loan periods of less than 30 days in duration. Payday loan lenders would have to evaluate a borrower’s ability to repay the payday loan. Nor could payday loan lenders charge borrowers fees for repaying early. (Note to the reader – this is not a problem in the PDL industry now.)

The new legislation, as proposed, would block regulators from capping the interest rate or fees that non-bank lenders could charge for loans made under the federal charter, which would allow these lenders to navigate current  state usury laws.

The OLA (Online Lenders Alliance), a trade group representing companies that offer short-term loans via the Internet, is in support of this new federal payday loan bill.

OLA President Lisa McGreevy was quoted as stating, “A federal charter, as opposed to the current conflicting state regulatory schemes, will establish one clear set of rules for lenders to follow. This will lead to the creation of innovative financial products for consumers demanding them.”

Read the complete Wall Street Journal Article by Victoria McGrane at here: WSJ New Federal Payday Loan Law Introduced.


EZCORP Reports Record Third Quarter Net Income Of $28.5 Million Up 8%

In case you failed to listen-in on the EZCORP Conference call, here’s a few bullets:

  • “At a consolidated level the big movers, in revenue terms, were jewelry scrapping sales and consumer loan fees.”
  • “EZCORP, Inc. (NASDAQ: EZPW), a leading provider of instant cash solutions for consumers, today announced results for its third fiscal quarter ended June 30, 2012. For the quarter, net income was $28.5 million, a company record for its third fiscal quarter, and earnings per share were $0.56.  For the year-to-date, the company reported a 23% increase in net income and a 20% increase in earnings per share, compared with the comparable period last year.”
  • “Consumer loan balances increased to $79.1 million globally at June 30, driving consumer loan fees earned during the quarter up 38%.”
  • “Total revenues of $229.0 million, up 13%, were driven by a 16% increase in pawn service charges, a 38% increase in consumer loan fees and an 18% increase in merchandise sales.”
  • “Net revenues of $145.3 million, were up 18%, with the increase attributable to improvement in bad debt expense.”

Check out the transcript at SeekingAlpha. And here’s a link to the EZCORP Press Release.


Payday Lending in America: Who Borrows, Where They Borrow, and Why

'Payday Loan Place Window Graphics' photo (c) 2007, Taber Andrew Bain - license: Research issued this 7/18/2012:
Payday Lending in America: Who Borrows, Where They Borrow, and Why
Link to PEW Report


Payday Loan Tribe-Sovereign Nation Model by Marc Benjamin at The Fresno Bee

Marc Benjamin at The Fresno Bee wrote a very informative piece on the payday loan tribe-sovereign nation model at:

The payday loan industry generates $52 billion worldwide each year, and Chukchansi officials hope to get a piece of it. They’re not alone; about three dozen tribes are in the business across the United States, said Allen Parker, a California consultant who works with tribes nationwide.

It’s an ideal business opportunity for tribes in locations too remote to operate a casino successfully, or for tribes whose casino revenues are down.

Although a tribe may need to hire a consultant or management group that takes a cut of profits and ensures the business is run properly, the overall costs can be lower because the tribe doesn’t have to follow state rules, said Jer Ayler, a Newport Beach consultant who runs payday loan storefront businesses and helps tribes with online loan businesses.

That angers regular payday lenders who have to comply with state laws and limits, he said.

“You’d be mad if you spent millions of dollars on compliance and regulatory issues compared with a tribe that can enter with very little capital and utilize the sovereign model to exempt themselves from state licensing regulations and usury laws,” Ayler said.

But a Los Angeles County Superior Court judge said tribes are not subject to California licensing rules because of sovereign immunity, said Mark Leyes, a Corporations Department spokesman.

Sovereign immunity may also provide protection in federal court.

Three tribes and their loan business partners were sued in April by the Federal Trade Commission after more than 7,500 consumer complaints over the last five years.

In the federal case, tribes are accused of overcharging for loans and illegally filing lawsuits against customers. In one case, a company forced consumers who owed them money to travel to South Dakota and face a tribal court that did not have jurisdiction over their cases.

Other contentions made in the federal case: employers were falsely told by tribal companies that they had legal court orders to garnish wages, and tribal companies disclosed an employee’s debt information to employers and coworkers.

The federal case detailed where a loan company charged interest rates and fees totaling $1,925 to pay off a $500 loan.

“We are concerned that the loan documents and website representations are truthful and complete,” said Nikhil Singhvi, a lawyer for the Federal Trade Commission in Washington, D.C.

But the tribes’ lawyer, John Nyhan, who represented two of the same tribes in the recent California case, said he expects the federal government’s case to be dismissed in the tribes’ favor because of sovereign immunity.

Meanwhile, the Native American Financial Services Association is aiming to reduce those types of suits by setting ethical guidelines for tribes to follow when dealing with customers.

Read more here:


Why Google Hates Payday Loans (But Loves Profiting from Them) More Thoughts

Why Google Hates Payday Loans (But Loves Profiting from Them)

From an anonymous search engine marketing company working in the payday loan space. Published anonymously to avoid possible retribution from Google or other companies.
Not only Google loves to hate payday loans but so does banks and credit unions.


Google has taken some dramatic steps in recent months to address quality issues in its search results. Since the beginning of 2012, Search Plus Your World, Panda 3.2, Ads Above the Fold, Venice, Panda 3.3, Panda 3.4, Panda 3.5, Penguin, Panda 3.6, Knowledge Graph, and Penguin 1.1 updates have all been rolled out in addition to countless other changes to ranking factors, the algorithm, and the search results page.

So why are the results to some search queries still so bad?

Payday loans, while much maligned, are a credit product that some un-banked and under-banked Americans are forced to rely on. Regardless of its politics or opinion of the product, as the arbiter of search, it should be Google’s goal to serve the highest quality, most relevant, and authoritative results to its users in the organic results, in the local results, and in the paid results.

Google is miserably failing to accomplish this.

To illustrate, let’s take a look at the first two pages of results for the query “payday loans.”

What is a user’s intent when entering this query? While it could… Click here to read the Article