Category: Laws


Texas CAB’s, CSO’s and 3rd Party Lender FAQ’s

Texas CAB – Texas CSO- Texas 3rd Party Lender

Texas Credit Access Businesses obtain credit for a consumer from an independent third-party lender in the form of a deferred presentment transaction or a motor vehicle title loan, more commonly referred to as “payday loans” or “title loans.”

In Texas, the actual third-party lender is not licensed, rather the credit access business that serves as the broker is the licensee in this regulated industry. The credit access business charges a fee to the consumer for obtaining the third-party loan; this fee is usually calculated as a percentage of the loan amount.

Third-party lenders typically earn an initial 10% interest and often participate in consumer NSF and late fees; 12% – 14% APR’s are not uncommon.

The borrower will sign a promissory note with the lender for the actual loan and a separate credit service agreement with the credit access business. Generally, all documents are signed at the credit access business location and payments are made directly to the credit access business.

For more Texas CAB – CSO – Third Party Lender informaion: Texas CAB


Texas OCCC Payday Loan License Expires?

Texas OCCC Regulated Lender Licenses Expire at Midnight on 12/31/16.

tx-occc-logoFor those of us offering loans in Texas, here is a copy of the alert we received from the Texas OCCC:

Good afternoon,
This is a final reminder that regulated lender license renewal is now open online via ALECS and must be renewed by December 31st.
Licenses will expire at midnight on the 31st. The fee to reinstate a canceled license is an additional $1000.

To renew the license online , you can follow the steps below:
1. Log in to ALECS and from the left hand menu click on “Manage My Business.”
2. Under the License heading, click “Renew License” then from the drop down menu at the top, select Regulated Lender.
3. Select the licenses you would like to renew by checking the box next to the license number, or click the box under “Select All” to choose all licenses.
4. Check the box at the bottom of the page to confirm renewal, then click “License Renewal”
5. Select payment type, enter payment information and follow the prompts.
The fee to renew an ACTIVE license if $510. The fee to renew an INACTIVE license is $250. Volume fees are based on 2014 Annual Report data.
To verify that your license has been renewed you can go to your Dashboard and click the “My Recent Activity” tab.

After following these steps, if you continue to have questions or problems, feel free to call us at 512-936-7605.
Licenses expire at midnight on December 31st.
Thank you and have a good day!
Licensing Department
Office of the Consumer Credit Commissioner


Payday Loans Australia

Payday Loans Australia

Payday lending vacuum makes regulation difficult

Marcus Banks, RMIT University and Ashton De Silva, RMIT University

The Australian Government is reviewing two consumer credit markets that heavily impact on the lives of many low-income Australians – payday loans and consumer leases for household appliances and furniture.

Among other matters, the review, triggered by a requirement in the Credit Act is investigating whether the current regulatory regime strikes a “fair balance” between the need for these industries to remain viable and the need to protect consumers from exacerbating their risks of financial hardship.

It is a significant – and welcome – step in the right direction that the review’s Terms of Reference recognise the link between the payday loans (also known as Small Amount Credit Contracts) and household goods rental markets.

However, more is required to adequately understand how low-income Australians actually manage their money, the scope and scale of their credit market engagements, and why this is crucially important for regulators to consider.

A complex juggle of debt

In our paper published this week analysing trends in Australian small loans markets, we argue that two basic frameworks underpin the relationship between the credit practices of low-income households and the firms that provide various forms of consumer credit.

The first framework has been termed by University of Queensland researchers Greg Marston and Lynda Shevellar as the mixed economy of credit – the complex routines and resources used by many low-income citizens in exercising their constrained credit choices.

They describe how there are very different costs and calculations involved in making decisions about borrowing money from the private sector, the state, family members and friends, or through non-government microfinance schemes. There are pragmatic considerations such as the location of different credit providers, cost, eligibility, speed and knowledge of available options.

Emotional costs also need to be weighed, such as the potential risk of shame or stigma seeking credit from a parent or a welfare agency.

The mixed economy of credit also has a very strong temporal dimension, as low-income consumers tend to assess the affordability of credit by periods that conform to their fortnightly receipt of Centrelink payments.

Market responses – alternative financial services

Secondly, various credit products and services have been developed – particularly in the last three decades – as market responses to the economic, geographical and emotional calculus involved in the mixed economy credit that is occurring within each citizen’s debtscape.

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An Alternative Financial Services (AFS) market has emerged – an economic framework comprising firms offering multiple lines of services and products to meet the needs of low-income and precariously employed households.

These firms provide payday loans, pawnshop services, rent-to-own household products and other forms of consumer leases, credit “repair” services, layby arrangements, debt collection services, in-house used car loans, “check-cashing” services (especially in the United States) and low-income insurance products.

Each AFS sub-market is highly complex. Firms in the small loans industry, for example, have specialised, multiline business models designed to offer particular products, such as pawnbroking and payday services, brokering services, or a suite of vertically integrated loan options that extend from low-margin, high volume and higher-risk small loans to higher-margin, lower-risk unsecured and secured credit valued in the thousands of dollars.

Each model takes a different approach to minimising default risk, encouraging repeat custom, sourcing new customer groups, leveraging value from consumer interactions, and instituting administrative and compliance efficiencies.

Poor understanding

Approximately 90% of online applications are rejected by SACC providers who nevertheless monetise these applications by on-selling the data as “lead-generators” to other lenders willing to take on higher-risk customers and to other markets such as consumer product retailers. One leading online industry stakeholder estimates that the lead-generation market is now larger in Australia than the small loan market.

An understanding of the AFS industry is very poor. We don’t know how many Australians use these services, nor in the ways these financial products are being incorporated into a low-income household’s mixed economy of credit.

Only partial insights are available due to the lack of industry-wide data on consumption patterns (or anything else). We know that the costs of consumer leases are highly polarised. On a total cost basis, consumer leases are the most expensive way to access a household appliance. However, on a fortnightly basis, they are one of the cheapest.

We know that over a million Australians are estimated to take out, on average, three payday loans each year. On the other hand we know that about 25,000 Australians took out a No Interest Loan Scheme (NILS) loan from a not-profit agency last year.

Tighter regulation?

The table below shows some stylised facts of what we have gathered so far about the relationships between the AFS market and consumers who are unemployed, casually/precariously employed, and those with regular paid income.


What are the implications of these insights for the current review? Should there be a national database where all credit providers are required to upload transactions in real time? Should the industry be more tightly regulated? While these are important questions we believe they do not address the fundamental problem: we do not clearly know why consumers access these forms of credit nor the scope, scale or patterns of their usage.

We do not know what specific (and overall) interactions with the AFS market may be contributing to low-income Australians becoming increasingly indebted.

While basic insights have been established, such as taking out multiple payday loans at the same time increases financial hardship, we do not know the welfare effects of more complex borrowing practices across the broader AFS marketplace. Further, we don’t know how environmental factors have contributed to the growth of the industry.

For example to what extent has government policy, changing labour market conditions, rising levels of income inequality and poverty, and the changes in the banking sector led to the growth rates we have observed? We strongly believe that unless these questions are explored any market interventions run the risk of being inefficient and unhelpful.

Any new regulatory regime developed from a review only examining one foot of the elephant (in this case certain aspects of the Australian AFS market) risks exposing low-income households to possibly greater financial hardship and emotional distress – especially when viable credit and welfare alternatives are not being seriously considered by the government.

The Conversation

Marcus Banks, Social policy and consumer finance researcher, School of Economics, Finance and Marketing, RMIT University and Ashton De Silva, Senior Lecturer, Economics, Finance and Marketing, RMIT University

This article was originally published on The Conversation. Read the original article.


Payday Loan Consumer Complaints are Too Low!

Payday Loan Complaints Too Low!

Payday loan consumer complaints are too low to suit so-called consumer advocates and the CFPB

Ok, here are the facts per the Utah Department of Financial Institutions 2014 Report (page 129):

  • Non-Depository Lenders – there are 599 physical locations in Utah.
  • A total of 53,777 deferred deposit loans were carried to the 10-week maximum in 2014, according to the report. Of those loans, 45,655 weren’t paid in full by the end of the terms. The Report FAILS to disclose how many payday loans were funded for the year in total!
  • There were a TOTAL of 13 consumer complaints to the Utah DFI in ALL of 2014! What? Really? Only 13 in total? 13!! Banks only wish they had as good a record!


Utah Department of Financial Institutions

Utah Department of Financial Institutions



Payday Loan Laws

Payday Loan Laws

Payday Loan Interest-Rate Caps

The following states have enacted laws that render payday loans void if they exceed the usury limit:

  • Minnesota, which caps interest rates for (a) written loan contracts at 8% absent applicability of another statute, Minn. Stat. § 334.01, subdiv. 1; and (b) consumer short-term loans at 21.75% APR, or the total of 33% a year on the part of the unpaid balance up to $1,125 and 19% a year on the part of the unpaid balance above $1,125. Minn. Stat. §47.59, subdiv. 3(a). Loans that exceed these rates are void and the borrower has no obligation to pay any amounts owing on them. Minn. Stat. §§ 334.03, 47.601, subdiv. 6(b);
  • Arkansas, whose state constitution provides that all contracts with interest in excess of 17% “shall be void as to principal and interest . .. . “
  • New Hampshire, which prohibits annual interest rates above 36% for loans of $1o,ooo or less. N.H. Rev. Stat. § 399-A:12(I). Loans that do not comply with those restrictions are void, and the lender has no right to collect any principal, charges, or recompense. N.H. Rev. Stat.§ 399- A:u(V);
  • New York, which prohibits any person or corporation not licensed by the state of New York from “directly or indirectly charg[ing], tak[ing] 16 Case 1:15-cv-05211-CM Document 6 Filed 07/31/15 Page 17 of 32 or receiv[ing] any interest … at a rate exceeding” annual interest of 16% on covered loans. N.Y. Gen. Oblig. Law§ 5-501; N.Y. Banking Law 14-a(1). Loans that exceed the rate are void. N.Y. Gen. Oblig. Law§ 5-511; see also Szerdahelyi v. Harris, 490 N.E.2d 517, 522-23 (N.Y. 1986) C'[A] usurious transaction is void ab initio … . “);and North Carolina, which imposes a tiered set of interest-rates limits with a maximum of 30% on loans below $15,000 and repayable between 12 and 96 months. N.C. Gen. Stat. § 53-176(a). Loans that violate this provision are void, and the lender has no right to collect, receive, or retain any principal or charges. N.C. Gen. Stat. § 53-166(d).
  • Colorado prohibits annual interest above 12% on unpaid balances for loans other than supervised loans. Colo. Rev. Stat. § 5-2-201(1). For supervised loans, Colorado prohibits a supervised lender from receiving a finance charge exceeding the equivalent of the greater of either of the following: (a) the total of 36% on unpaid balances of $1,000 or less, 21% on unpaid balances between $tooo.o1 and $3,000, and 15% on unpaid balances greater than $3,000, or (b) 21% per year on unpaid balances. Colo. Rev. Stat. § 5-2-201(2). Consumers are relieved of the obligation to pay any charge that exceeds these limits and are entitled to a refund from the lender or assignee for any excess amount that they paid. Colo. Rev. Stat. § 5-5-201(2).
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