Payday Loan Internet Business
BY: Jer Trihouse. Regarding the payday loan internet business model, I’ve been adamant for years that the “choice-of-law” licensing model is subject to major disruption.
Serious analysis of long term survival as a lender in the payday loan/small dollar lending space suggests legal application and compliance of your borrower’s “home” state residence loan rates and terms is the least aggressive course.
Recently, the Minnesota Supreme Court put more emphasis on the correctness of this strategy for payday loan lenders via the Internet. (I suggest you review this piece as well.)
Lenders who insist on employing products, fees and rates that attempt to circumvent their borrower’s “home” state law, will suffer the wrath of the CFPB, UDAAP violations, Commerce Clause challenges, RICO charges (prosecution and civil penalties for racketeering), ad infinitum.
Suffice it to say, if your Team persists in avoiding complying with your borrower’s “home” state laws and you have any “scale,” you will eventually come to the attention of the FED’s. Your lawyers maybe happy with the process that proceeds but you likely will not.
Does this thinking apply to the tribe – sovereign nation model? Your regulator certainly thinks so. And she usually has the biggest budget.
The OCCC in Texas passed a “Clean-Up Bill” causing our Texas friends a lot of grief. (Read below for TOFSC thoughts on TX.)
Here’s a piece on this subject by the highly regarded Consumers Financial Services Group
The OCCC in Texas passed a “Clean-Up Bill” causing our Texas friends a lot of grief.
Read the Texas update here and the full story on our Payday Loan Industry Blog here:
From Michael Brown & Robert Wheeler:
The 2015 Texas legislative
session passed a “Clean Up Bill”, which authorized the OCCC to
review, repeal, and/or replace rules regulating CAB’s. Those new changes were
proposed in September for pre-comment and voted for approval by the Texas
Finance Commission Board to be published in the Texas Register on October 16,
2015 (last Friday) at the Texas Finance Commission meeting in Austin, Texas.
There are approximately 144 changes to TAC 7, Chapter 83, Subchapter B (the
code that outlines the rules CABs live by). This is the first time in 4 years
that any new rules for payday loan or auto title loan businesses known as
“CABs” have been put into place. It is time to get educated on
changes and make the necessary modifications to your documents, processes, and
other operating methods.
The changes affect a broad range of areas from; Definitions; Licensing Fees,
Notice of Delinquency of Annual Assessment, Denial, Suspension, Revocation
based on Criminal History, Examinations, Files & Records, Separation
Between Third Party Lender and CABs, and Case Hearing Procedures.
CAB Consulting has thoroughly reviewed the changes and put together a
compliance plan to ensure CABs, their software providers, and third party
lenders are compliant moving forward into 2016. We are told the first round of
changes are slated to be made effective in late December of this year or early
January 2016.
If you would like to learn more, please contact Michael Brown at 214-293-8676
or Robert Wheeler at 956-639-7162.
http://www.creditaccessbusiness.com/2015/10/23/new-rules-for-texas-credit-access-businesses/
Hang in there Payday Loan Fans!!
Challenging times ahead = tremendous opportunities. Our customers are in need of our services MORE THAN EVER!
Jer@TrihouseConsulting.com
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