Take Away from EZCorp F2Q13 Earnings Call:

Regarding consumer demand:
“The customers’ need for short-term cash is growing. Nearly every study we see, every empirical set of data that we look at agrees that our consumer is terribly under-served. What we also know to be true is that our customers are sophisticated in their choices. They correctly see us as the cheapest and best alternative. They’re well-educated, hard-working people that appreciate the product and services we provide…”

Regarding smart phone penetration:
“In the first half of this year, roughly 6% of our retail sales came from online transactions and over $6 million of our current loan balance was generated online. We expect both of these penetrations to more than double in the next 12 months and grow exponentially in the coming years. Their preferred method of communication with us is quickly moving to their smartphone. That is why we are investing in the technologies that will support our ability to be at the forefront of that communication for years to come.”

Regarding the U.S.:
“Moving to U.S. financial services, we now provide financial services in 490 storefront locations in 16 states and online loan products in five states. The planned expansion in U.S. financial services is on track that we intend to open a total of 65 to 75 locations this fiscal year and intend to offer online products in 12 to 15 states by the end of the year. Most of these states will be where we already operate storefronts successfully and the remaining states will be based on customer need and financial opportunities.”

Regarding Revenue:
“Inside our base business, we are growing our revenues. Total loan balances were $38 million, up 13% from the prior year quarter, of which the online lending portfolio balance represented over $1 million. Our balances inside of Texas grew 7% and our balances outside of Texas grew 17% driven by both new locations and new products in existing stores.”

Regarding product evolution:
“Customers continue to shift from first generation loan products, traditional payday and installment loans to second generation single payment, multiple payment and auto title loan products. Balances related to these products increased 57% driven by auto title loans. Loan fees were $42 million, up 3% from prior year quarter reflecting the shift to lower yielding products.”

Regarding Texas:
“The profitability of the financial services business was negatively impacted by over $1 million during the quarter as a result of ordinances enacted in Dallas, Austin, San Antonio.”

Latin America kicking ass…

U.K biz killed by lower gold prices.

Regarding Australia:
“Cash Converters International Limited, our strategic affiliate in Australia announced that it had achieved a 39% increase in net income during the first half of its fiscal year. Cash Converters’ outstanding performance resulted in a 43% contribution increase at EZCORP.”

You can access the entire earnings call here: EZCorp and here: Seeking Alpha.



There’s a story today about the New York Check Cashing Association lobbying hard and making significant contributions to New York legislators in an attempt to pass enabling payday loan legislation. We hope this goes better than what’s happening this week in Texas. Read it at New York Daily News.



The CFPB issued a Report today entitled, “Payday Loans and Deposit Advance.” You better read it!

The Team at



The Tribe Payday Loan Model Saga in Colorado Continues:

1437 Bannock, Denver, CO 80202

Plaintiffs: STATE OF COLORADO ex rel. JOHN W.

This dispute arises over allegedly illegal, usurious, and unlicensed loans, issued over the
Internet, in Colorado to Colorado consumers. The State alleges that Western Sky, a South
Dakota limited liability company, has conducted business, through the Internet, to make loans to
Colorado consumers in amounts ranging from $400 to $2,600 with annual percentage interest
DATE FILED:April 15, 20132 rates (“APR”) of approximately 140% to 300%. Webb is the sole manager and owner of
Western Sky. Further, Webb is an enrolled member of the Cheyenne River Sioux (the “Tribe”)
and resides on the Cheyenne River Indian Reservation (the “Reservation”) in South Dakota.

1. Western Sky is a South Dakota company. Webb is Western Sky’s sole manager, sole
executive officer, and sole owner. Webb directs, controls, manages, participates in,
supervises, is responsible for, and authorizes Western Sky’s activities.
2. Western Sky is principally engaged in the business of making small, short-term
personal loans to consumers.
3. Via the Internet and television advertising, Western sky offers and enters into loans
with Colorado consumers.
4. According to its website, Western Sky offers personal loans of up to $2,600.00.
5. Also according to its website and a loan agreement with a Colorado consumer the
loans have APRs from 140% to over 300%. The loan agreement with the Colorado
consumer reflects a loan for $400.00 with over 330% APR. See Exhibits 1 and 2 to
the affidavit of Jodie Robertson. (Robertson Aff., attached to the State’s Motion as
Exhibit 2).
6. Colorado Consumers apply for loans directly through Western Sky’s Website.
7. Western Sky electronically deposits the loans’ proceeds into the consumers’ bank
8. Pursuant to the loan agreements, consumers authorize Western Sky to withdraw funds
electronically from the consumers’ bank accounts.3
9. In 2010 alone, Western Sky made over 200 loans to Colorado consumers.
10. Western Sky is not, and at no relevant time was, licensed as a supervised lender in
Colorado authorized to make supervised loans pursuant to Colorado’s Uniform
Consumer Credit Code, C.R.S. § 5-1-101, et seq. (the “Code”).
11. In November 2010, Administrator Udis (the “Administrator”) demanded that Western
Sky cease making any new loans. The Administrator also demanded that Western
Sky make refunds to consumers of all of its loans’ improper and excess finance
12. Western Sky did not comply with the Administrator’s demands.

Here, it is uncontroverted that Webb is the sole manager, executive director, owner, and
principal of Western Sky. It is further undisputed that Webb directs, controls, manages,
participates in, supervises, is responsible for, and authorizes Western Sky’s activities. Finally,
the record before the Court confirms that Webb has general responsibility and final decision
making authority for all of Western Sky’s business operations. Accordingly, because Webb has 11
the exclusive authority to control the actions of Western Sky, he may also be held individually
liable for Western Sky’s violations of the Code.
To the extent that Defendants contend that “Indian businesses operating on a reservation
are not subject to state jurisdiction and control” and are thus preempted by federal law, the Court
is not persuaded.

Denver Court commentary:

Defendants argue that Congress has completely preempted the
regulation of Indian affairs on a reservation. However, even if that
were so, it begs the question of whether the conduct of which [the
State] complain[s] involved regulation of Indian affairs on a
reservation. I find and conclude that it did not. [The State]
allege[s], and defendants do not dispute, that defendants were
operating via the Internet . . . . The borrowers do not go to the
reservation in South Dakota to apply for, negotiate or enter into
loans. They apply for loans in Colorado by accessing defendants’
website. They repay the loans and pay the financing charges from
Colorado; Western Sky is authorized to withdraw the funds
electronically from their bank accounts. The impact of the
allegedly excessive charges was felt in Colorado. Defendants have
not denied that they were doing business in Colorado for
jurisdictional purposes, nor does it appear that they could. See
[Cash Advance I, 205 P.3d at 400]. “Business conducted over the
Internet that would confer jurisdiction on a state court also
demonstrates that the business activity constitutes off-reservation
activity.” [Id.]

C.R.S. § 5-1-201(1) provides that the Code “applies to consumer credit transactions made
in this state.” The Code further provides that a consumer credit transaction is made in this state
(b) A consumer who is a resident of this state enters into a
transaction with a creditor who has solicited or advertised in this
state by any means, including but not limited to mail, brochure,
telephone, print, radio, television, internet, or any other electronic
Code § 5-1-201(1)(b).
Here, it is undisputed that Defendants operate a website and engage in television
advertising in this state, thereby soliciting and advertising their lending business in Colorado. It
is further, undisputed that Defendants have entered into loan agreements with Colorado
Accordingly, because Defendants’ business activities are conducted off-reservation and
because Defendants solicit and advertise their business in Colorado and have, in fact, entered
into loan agreements with Colorado citizens, Defendants are not entitled to tribal immunity or
federal preemption. Rather, based on the undisputed facts before the Court, the Court concludes
that Defendants are subject to the Code’s previsions and are thereby liable for any violation
thereof. Specifically, because Western Sky is not, and has never been, licensed as a supervised
lender, and because unlicensed lenders are not authorized to charge a finance charge on 13
supervised loans, Defendants’ liability for restitution to consumers of all finance charges,
including penalties, on all unlicensed loans made or collected with respect to Colorado citizens,
is established as a matter of law.

Conclusion of the Court:

WHERFORE, in light of the reasoning stated above, the State’s Motion for Partial
Summary Judgment – Second Claim for Relief is hereby GRANTED. It is further ordered that, 15
in light of the voluminous unlicensed loans extended by Defendants in violation of the Code,
estimated at over 4,000, the State’s request that a special master be appointed to determine the
number of, and extent to which, consumers have been adversely affected by Defendants’
unlawful activity in this matter is GRANTED. The Parties shall submit a joint list of three
potential Special Masters, not later than 14 days from the date of entry of this Order, and the
Court will select one from that list. If the parties cannot agree on a list of potential Special
Masters, the Court will appoint someone of the Court’s choosing. Further, in accordance with
the Court’s findings herein, the State shall file an Affidavit of Attorney’s fees incurred in
replying to Defendants’ tribal immunity and federal preemption arguments in their Response, not
later than 14 days from the date of entry of this Order.
DONE this 15th day of April, 2012.

“It’s not over until its over.”  Email us for a link to the entire Court Decision.