If you’re in the AFS space, you must be aware of The Sosa Brothers. Their story about their launch of Netspend and their follow-up, Mango Financial is fascinating. These 2 Sosa Brothers – Netspend/Mango Financial videos have been around for a while but if you somehow missed them, take a few minutes…
Netspend:
Mango Finance
THE BLOG
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By Jer with Trihouse Consulting ~ The tribe payday loan business model has been around since at least the late 1990’s. In the “early days,” individual tribe members collaborated with lenders to circumvent state and province usury and licensing requirements. Although this rendition of the tribe sovereign model is no longer employed, there still remains outstanding litigation and regulatory challenges that continue. The Martin Web and Western Sky controversies are part of this ongoing story.
Western Sky has always described itself as “wholly owned by an individual member of the Cheyenne River Sioux Tribe;” not by the tribe or any of its political subdivisions. It refers to itself as a Native American-owned business operating within the exterior boundaries of the reservation, a sovereign nation within the U.S.
Western Sky Financial, “located” on the Cheyenne River Reservation Timber Lake, S.D., has said it was not required to follow Maryland law because of tribal immunity, according to the Maryland Department of Labor, Licensing and Regulation.
The Maryland labor department’s Division of Financial Regulation said Thursday it has issued a final cease and desist order against Western Sky, its owner Martin Webb and other related parties. The order also prohibits the company from collecting or attempting to collect on any loans made to Maryland consumers. The company has the right to appeal the final order to Maryland Circuit Court, said Mark Kaufman, commissioner of financial regulation.
With the aid of Wall Street and sophisticated tribe legal counsel, the payday loan industry has evolved significantly since the early days of what was once referred to as “the rent-a-tribe model.” Much like the gaming industry, there are today, legal methods and strategies available that enable geographically challenged tribes lacking sophisticated resources to collaborate with “capital” and expertise in serving the millions of consumers who want and need small dollar loan products to help them solve their temporary, short-term financial challenges.
For more on this topic: Allen Parker at Consultants4Tribes.com
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Google has “killed” a lot of payday loan lead generators and payday loan affiliates. Google’s Matt Cutts discusses this specifically here: Google PDL Searches A short video is included.
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By Jer Trihouse: Raj Date, a former director of The CFPB has formed a consultancy to focus on bank sponsored payday loan/small dollar loan products. He’s quoted as saying, “Is it a product that is expensive because it can be? Because overdraft sets a price umbrella, and traditional payday sets a price umbrella,” so banks say, ” ‘Whatever, just a little bit lower than that.’ But that doesn’t mean that pricing won’t come in if there’s competition.”
In the piece at American Banker, Mr. Date goes on to say, “Developing a better short-term loan is “the single most promising thing” in the portion of the consumer financial industry that serves low-income and other financially underserved customers.”
In essence, Mr. Date states that he thinks banks are simply charging more than they need to. Banks have the luxury of having a “captured customer, access to more credit data decisioning tools, superior marketing tools and lower fraud costs and a much lower cost of capital.” (He’s certainly correct regarding his last point! Banks can access capital from the Fed for less than 1%!) “So, there is nothing about the product that isn’t cheaper than the alternatives, overdraft and traditional payday.”
There’s just one point Mr. Date fails to acknowledge. A bank cannot compete with a nimble, entrepreneurial enterprise employing the multitude of credit decisioning tools already available to small dollar lenders, employment of social media, 24/7 loan proceed delivery channels, smart phone web site presence and most importantly, the millions of relationships we small dollar loan providers already enjoy with our customers.
Read the entire American Banker piece here: EX-CFPB Director launches Payday Loan Consultancy
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Store operators in the payday loan business, car title lending, cash for gold, BHPH, etc. don’t get this: YOU MUST figure out the mobile marketing challenge you face TODAY. Customer’s are “looking” for you on their phones. If your biz looks like crap on their phone, you just lost another customer!
I’m NOT suggesting you invest $1000’s of bucks on a “full-on” mobile friendly web site that processes customer applications, captures their bank acct. info, nabs their SS#… Hell, today, store owners don’t even need a traditional website! Go check out a company FOCUSED on building phone friendly websites for our industry. It’s $200 one-time!
What’s one customer worth to you? Just enable a customer to FIND you on their phone and “click-to-call” your store or find your location on Google Maps!
Get started at EZMobileToday.com This is a “no-brainer!” Enable your next customer to call, email or text your store.
And call to thank me when you get that new customer! I’m serious!! Jer – Trihouse
PDF: 500+ Pages $150.00
How to Start or Improve a Consumer Loan Business: Storefront or Internet anywhere!
