Advance America and Payday Loan Media Bias

Advance America funded 10,000,000 payday loan transactions in 2010. They are the largest brick-n-mortar, regulated lender in the U.S. They received just under 50 complaints TOTAL for the entire year!
With the exception of Jessica Silver-Greenberg at the Wall Street Journal and Carter Doughtery at Bloomberg, why can’t the media “get this?” Because they are lazy! It’s easier to visit one of the paternalistic web sites such as the CRL and swallow the drivel.

I have a novel suggestion for you reporters. Pick up the phone and call an industry insider who spends time “in the trenches.” Then, get off your ass and visit some payday loan stores. Talk to the customers. Leave your bias outside and forget the loaded questions. You want to build your brand? You want to develop a stellar reputation for truth and accuracy? Be an outlier! Dig… do the work… approach your reporting with an open mind!

Jer – Trihouse 702-208-6736


Payday Loan Strategies, Tactics & Trends

Everyone wants to know what’s going on in the payday loan industry. What are the latest trends? What’s the newest strategy? How do my defaults compare with every one else and how do I improve? Heck, for that matter how does everyone else even measure or define defaults?

One method of gaining additional insight that we’ve always recommended is to listen in on the earnings calls of the publicly traded companies. By listening in or reading the transcripts, you gain valuable insight into trends, profits or losses, and strategies to enable you to run your business better and manage your investments.

A great example of what you can learn was recently provided by the 4th Quarter earnings report by EZCORP, Inc. Joe Rotunda, President & CEO, reported, “This quarter marks our twenty-fifth consecutive quarter of compounded growth in earnings. It’s also the eighth consecutive fiscal year of earnings growth. I believe this amplifies the strong dynamics within our business. When one component is adversely impacted by an external factor primarily associated with economic conditions, another strengthens and vice versa. This is true both between and within the business segments”.

If you read the transcript, Joe is referring to the ability of EZCORP Inc. to benefit from offering multiple products and services in their stores. Now all their products are focused on sub-prime financial services; pawn, payday loans, auto title loans, gold buying , etc. But the beauty of offering multiple products rather than taking the mono-line approach is that as the economy changes and evolves you always have a spectrum of products that make sense for consumers.

Joe goes on, “For our fourth quarter, we are reporting net income of $16 million. That’s an increase of 44% over last year. Diluted earnings per share were $0.37 compares favorably to $0.26 last year. If you adjust for two unusual elements, which you will be hearing about, the drag of Hurricane Ike …”

Looks like the industry, based on EZCORP Inc., is experiencing record income and phenomenal growth.

Later in the call Joe says, “From a bad debt perspective, we’ve done an excellent job of managing initial defaults through balanced underwriting and an intense focus on getting the customer into the store on the day their loan is due. For this quarter, and as for the year our initial defaults show improvements to last year. However, our net bad debt still increased at a faster rate than fees and we ended the period at 36% of fees versus 31% last year. Without Hurricane Ike, bad debt would have been within three points of a year ago. The increase, I believe, reflects the difficulty in the current economic environment to collect debt once it’s incurred. It shows what the consumer behaves once they default and it shows in the capital markets that buy bad debt as well. So, regardless, we are committed to continue to address process to improve both”.

So, just as we have been harping on, defaults and collections are becoming more of an issue and demand close attention. That’s a trend you need to be aware of. No surprise here but HOW DO YOU DO IT?

Next, Joe discusses some new products EZCORP Inc. has introduced. “Moving from new stores to new products, we have expanded our installment loan to 90 stores in Texas. We’ve been cautious with the product because of the size of the loans, from $1525 to $3000, and the length of the term, which is at five months. We believe we have a pretty good handle on the customer, bad debt management, and we plan to expand the installment loan to several additional states beyond Texas during the New Year.

We also recently began offering another new product, auto title loans. We introduced this product last month in all 11 stores in Missouri. We believe this product offers us an incredible opportunity to leverage our store base and drive incremental returns. It also affords us the opportunity to expand our customer base and to diversify our product assortment beyond solely the payday loan product. Our plans are to move judiciously and expand the auto title loan product to additional three to five states and approximately 100 additional stores by the end of the year”.

And finally, “We are doing installment loans today in Texas and we are doing them under the CSO statutes. We’ve developed the loans so it’s a five-month period, which is as far out as we want to go and the pricing to the customer is approximately 10% of the principal of the loan paid every – twice a month as they go through the period. The rate, if you calculate an APR on it, the APR is somewhat lower for an installment loan than it is for a typical or a traditional payday loan.

Now, rather than go on-and-on dissecting this conference call, we suggest you head over to:

EZCORP 4th Quarter Conference call at
and read it.

And don’t stop there! Get access to those companies you want to follow and listen in on the calls or read the transcripts. Typically, you can do a search, click on Investor Relations and receive an email when a call is scheduled.

There’s some great stuff buried in there you just have to harvest it.

Comments? Suggestions? Let’s hear it!


Payday Loans: Good News Continues – CFPB & Payday Loan Ability to Repay Analysis

Payday Loans: Continued Good News for Consumers & Lenders!


Ronald Mann, a Columbia University law professor was hired by our industry to survey 1000 payday loan borrowers.

The question put to our customers? How accurately could they estimate how long it would take the borrower to pay us back and how well the borrower understood our loan product.

No hand cuffs were put on the professor.

Payment to him did not hinge on his findings.

The results of this study per Professor Mann?


Mann said, “That while many borrowers are desperate for cash, they understand the cost of the loans, which typically charge an upfront fee of roughly $15 for every $100 borrowed.”
“The problem isn’t that payday loans are expensive, it’s that we live in a capitalistic society and don’t have a safety net, and lots of people make less than other people and can’t make ends meet,” he said.

Why all the hullabaloo?

Depending on the agenda of the reviewer of his findings, Professor Mann’s 2012 study strongly suggests that underwriting standards are often not necessary. Then again, in other circumstances thay maybe. “The relevant policy question is whether borrowers, deciding to start borrowing from a payday lender, understand what will happen to them,” said Mann in an interview.

The CFPB – Consumer Financial Protection Bureau referred to Mann’s research 30+ times in their effort to place new, crazy restrictions on payday loans, title loans… small dollar loan products.

Ironically, the recently appointed CFPB Director K. Kraninger and her Team are using this same study produced by Professor Mann to refute the attempt by Richard Cordray – previous administartions head of the CFPB – to constrict loan offerings to sub-prime, cash strapped consumers

Interestingly, Professor Mann argued how the CFPB, under former Obama-appointed Director Richard Cordray, interpreted his research, suggesting that “the current rule overemphasized cases where consumers borrowed beyond their means.”

The study revealed that 60% of first-time payday loan borrowers accurately predicted within two weeks when they could repay a small-dollar loan. But it also indicated that in many cases the flip side was true — that 40% of borrowers had no idea when they were going to pay back a loan.


Today, the new CFPB is using this study to undermine Richard Cordray’s craziness. The study seems to strongly suggest that consumers can reliably predict when they can pay back the small dollar loan lender and thus no “ability to repay” determination is required!

In court documents, the CFPB under former acting Director Mick Mulvaney cited Mann’s study as a key piece of evidence in support of “revisiting” the underwriting requirements in the payday rule.

Last year, Mulvaney sided with two payday loan trade groups suing the CFPB to invalidate the rule, which relies on federal law banning “unfair” and “abusive” practices.

Citing Mann’s study, today’s CFPB advocates that our payday loan industry trade groups HAVE presented “a substantial case” demonstrating that most payday loan borrowers DO KNOW “what they’re getting into when they take out a payday loan.”

A judge recently agreed to delay the compliance deadline for when much of the Cordray rule will take effect to give the bureau time to propose and finalize a revamp.

“Basically the only thing that has changed the Bureau’s analysis is the people doing the analyzing.”

So, what’s the premise of our new CFPB to throw out the “ability to repay” analysis requirement? “If borrowers understand the product, then it cannot be abusive. Elements of abusive include “a lack of understanding on the part of the consumer of the material risks, costs, or conditions” of the loans as well as “the inability of the consumer to protect the interests of the consumer in selecting or using” the loans.

Again, according to who interprets Professor Mann’s study, it can be concluded that our consumer understands our payday loan product and “what can happen to them if they do not repay their loan.”

So… our products and processes are not unfair or abusive.

From Professor Mann: “The premise of the rule was that so few people understand that they are going to roll the loans over a lot that the product is unfair and abusive. That’s the real difficulty. It’s difficult to regulate out of existence a consumer finance product because some percentage of people don’t understand how the product works.”

“The funding came from an industry trade association, which hoped that the study would produce favorable findings, but the arrangement, as always, was that I could publish whatever I wanted whether the results struck them as good or bad,” Mann said. “There was not really any relationship with the payday lender.”


This “ability to repay” analysis WAS a big, black, ugly cloud hanging over our industry!

Sure, maybe some lawyers, lobbyists and more than a few vendors serving “The BUSINESS of LENDING MONEY to the MASSES” would bill for more hours.


Our customers would have zero ability to get a few hundred dollars in their hand to pay an emergency bill, get their prescription filled, keep the lights on and avoid reconnection fees, pay their traffic ticket, fix their car to keep their job…

SMB’s all over America would shut down, jobs lost, landlords vacancy rates climb…

Banks & credit unions want NSF fees! They do not want to go through the hassle of lending $300 to “the masses.”

What do YOU think? Email:

Payday Loans, Car Title Loans, installment loans, signature loans

How to Lend Money to the Masses


Prestamos: Payday Loans & Serving the Latino Market-No One Does It Well

Necesito Dinero Rapido?

Deed Money Fast?

Prestamo = Loan = Prestamos

[Excuse my lack of correct Spanish punctuation! It’s my keyboard AND my Spanish.]

What’s my point? Jump on your phone or your computer. Do a search in Spanish for keywords in all the various incarnations of payday loan, fast cash, personal loan, loan today…

You will not find any lender doing this right! And lead generators? They suck at it too.

Sure, there are a few lenders with a decent front-end; website and disclosures in Spanish. But name a lender who has invested in the back-end, an app, and is US based. Pathetic! Can you BEG your Loan Management Software provider to help you with Spanish contracts, emails, text messages, disclosures, SEO/SEM…? If you are out there, RAISE YOUR HAND LMS SOLUTIONS! Silence…]

Believe it or not, the 1st page Google results are in ENGLISH or lenders in Argentina! Talk about missed opportunities… Email for more ideas on strategies for addressing the Latino market! And shameless plug: Get up to speed with the payday, installment & line-of-credit lending here: “The Manual.” It’s so big it’s SCARY. Basics, strategies, tactics, the latest developments…

Give it a shot. Try “prestamos hoy.” or “prestamos personales.”

Oh, PS: Are you a buyer of payday loan leads in Arkansas? West Virginia? They’re cheap! Reach out…



The Money Doesn’t Know What It Doesn’t Know: Jer Trihouse

Jer Trihouse ConsultingBy Jer Ayles-Ayler * I got a call from  Hilary Miller, a lawyer buddy of mine. A group with more money than god wanted his counsel regarding entry into the small dollar loan space. When he explained they would have to pay him, they bailed.

Great! You have access to “the money.” So what! Do you really think attending a conference, making a few calls gathered from Linkedin, and talking with vendors with something to sell are going to deliver your “secret sauce?”

• Lead gen
• Analytical
• Collections/Underwriting
• CSR’s
• Software that does what you’re team wants it to do.
• Legal/Licensing/Compliance/Taxes/Offshore/Tribe/State
Tactics and Strategies
• Technology
• SEO/SEM/Mobile/Offline marketing

There are a LOT of really smart, creative people in our space. We aren’t making a ton of money by accident. We’ve learned the hard way – in the trenches. We’ve screwed-up royally BUT survived that early, catastrophic failure; well most of us :o)

So… you’re a lender. Oh, I get it. You’re an Internet guy now. You’ll do it all in your underwear from your beach-front home office ( Stop laughing, no cracks! That’s me :o) You really think you don’t need troops in the field, out in the trenches? Who is going to knock on doors and collect your money? Whose going to repo your collateral? Where are you going to store this stuff? Payday loans – the way most of us are doing them today – are toast! The PDL cheese has moved. You have to differentiate your products and services. It’s a new world, a savvy consumer, and more regulators than you can shake a stick at. Plus, plenty of lawyers to remind us of this on a daily basis.

Yep, it takes capital but that isn’t enough. It takes a village – I mean a team :o)

To succeed and survive, you must collaborate. You’ve got to “play BIG” with your Team to win. Our industry is changing rapidly. There has never been so much opportunity. Nor has there ever been so many challenges. Millions of consumers all over the world Want and NEED our products!

Expecting to “pick the brain” of an expert over lunch and launching your enterprise will lead to a catastrophic failure. Build relationships NOW; before you need them. Even those of us who have been in the game for years still have to invest time and money.

Want to explore? Need to put capital to work? Want to take your expertise in operations to the next level? Got a new solution for the industry but can’t get in front of the “players?” Hit me…

WARNING! I’m BUSY. Drop an email. Introduce yourself. I’m an old Dude. I talk to a lot of really smart folks all day long. (I’m serious!)  Put some bullets to me in writing. And NO, your input will not wind-up on my Blog :o) I have so damn many NDA’s and MOU’s I just assume we have one with you already!

Finally, if you’re going to be in Newport Beach or Corona del Mar in March, I like a nice red. I’m not sure what Hilary drinks. See you in the St. Regis. Go ahead! Just try to “pick my brain.”