Congressional Hearings Confirms That States are Doing a Good Job at Regulating Short Term Lending

If you’ve been in micro-lending for any period of time you’re familiar with CRL – Center for Responsible Lending and Veritec, a regulatory service for various state payday loan compliance monitoring.

The Center for Responsible Lending has attacked the payday loan industry since time began. They never fail to twist any facts presented to them nor do they hesitate to distort the truth. And as  far as suggestions to alternatives for payday loans they offer only one, so elegantly stated by Jean Fox (CRL Director of Financial Services) at Rep. Guiterrez’s hearings on the payday loan industry, “Payday loan consumers should simply ask their friends and family for financial help.”

A review of data revealed by Veritec provides ample ammunition for arguing against the propaganda spit out by The CRL. The only problem is that The Center for Responsible Lending has gotten very good at interpreting this data to support their anti-business leanings.

The Center for Responsible Lending distortions have become so ridiculous that it prompted Veritec to issue a White paper analysis refuting the misinterpretations made regarding Veritec’s data.


If you care about the micro-lending industry (payday loans, pawn, check cashing, car title loans…) you have got to educate yourself and be ready to intelligently defend your business.

The following is a press release issued by Veritec originally appearing here:

Following is Veritec’s statement.

We bring this to you because each of us must do our little bit to intelligently defend our industry. You need solid, accurate information.

So here it is…

Congressional Hearings Confirms That States are Doing a Good Job at Regulating Short Term Lending

JACKSONVILLE, Fla., April 8 /PRNewswire/ — A House Financial Institutions and Consumer Credit Subcommittee hearing held April 2, 2009 for H.R. 1214, the Payday Loan Reform Act, included testimony
about the effectiveness of state payday lending regulation. The testimony emphasized that some states have chosen to strictly regulate short term lending, while other states have simply attempted to ban payday loans by implementing limits on fees based on an annual percentage rate.

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“Several states, including Florida and Oklahoma, are effectively protecting consumers,” said Thomas Reinheimer, CEO of Veritec Solutions of Jacksonville, Florida. “Veritec is at the forefront of implementing effective regulatory enforcement solutions for strong consumer protections required by state law. We see first-hand the impact of good regulation in enabling access to short-term credit while protecting consumers from getting trapped in a downward debt-cycle.”

Unfortunately, certain consumer advocacy groups blindly seek to ban availability of short-term credit without full consideration that their actions limit consumer choice. This near sighted approach often results in consumer usage of un-regulated products such as off-shore Internet loans. Reports published by Veritec, based on millions of actual loan transactions, contradict many assertions made by these consumer activists.

“The hearing provided a clear presentation of the product, how it works, the potential abuses, and what has been effective in addressing potential abuses that occur in the industry. State regulatory data based on millions of actual loan transactions in Florida and Oklahoma, two states that have effectively eliminated
multiple loans and rollovers, clearly demonstrates that short-term lending can be regulated effectively,” said Mr. Reinheimer.

Veritec has published detailed white papers and reports about effective regulation of the payday loan industry, available at www.veritecs.com, that illustrate the following facts:

* Borrowers and lenders are unable to roll-over payday loans in Florida and Oklahoma.
* Over 75 percent of borrowers pay-off their loans within 2 days after the due date.
* Grace periods and repayment plans are available under state law to any eligible borrower who can not  pay off their loans on time.
* Over 25% of borrowers no longer use the product more than one year and a majority of borrowers no longer use the product after 3 years.

A recent press release issued by the Center for Responsible Lending (“CRL”) distorts the truth about consumer protections in Florida and Oklahoma. State law prohibits roll-overs in Florida and actual data from millions of loans conducted by in Florida clearly shows that borrowers do not roll-over their loans. Despite these publicly available facts, CRL continues to disseminate erroneous information. “I simply do not understand why CRL continues to misrepresent the facts,” said Mr. Reinheimer.

“We are concerned that states considering regulation and enforcement of consumer protections may be swayed by misinformation from CRL. Veritec supports effective regulation of short-term lending that provides borrower access to short-term credit products with enforcement of consumer protections. State bans on short-term credit products often have an unintentional consequence of helping unregulated lenders, such as off-shore Internet lenders, by eliminating a consumer’s option to choose a regulated product,” said Mr. Reinheimer. “To better illustrate this, all anyone has to do is to search the Internet for loans available in rate cap states and see that unregulated, unlicensed activity is alive and well.”

Veritec Solutions LLC is a regulatory services company that manages statewide lender compliance programs in eight states with statewide databases and related limits included in their respective payday lending (aka deferred presentment, deferred deposit) statutes. Veritec helps state agencies regulate lenders through the
management of these programs. Veritec’s primary customers are state regulatory agencies; the firm does not supply any goods or services to the payday lending industry.

SOURCE Veritec Solutions LLC
And here is a link to the 15 page White Paper at their web site:

Comment? Question?

Comments ( 1 )
  • JeffKursman says:

    One of payday lending’s largest opponents, the Center for Responsible Lending, is among those set to benefit if payday lending is banned. CRL is the creator of the Self-Help Credit Union.

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