Tag: payday loan industry


Payday Loans – Consumer Federation of America Wake-Up!

The CFA, Consumer Federation of America, continues to misstate facts surrounding the payday loan industry. It’s intentional and unfair. They are a “non-profit” organization whose sole purpose is to place limits on Americans and reduce their financial choices.

The Consumer Federation of America CFA thinks they know what’s best for the rest of us and is composed of a well-funded group of elitists.

A great example of this occurred when Rep. Luis Gutierrez, speaking to CFA President Jean Fox at a House Financial Services Subcommittee on Financial Institutions and Consumer Credit said, “If you wish to be against the bill because you wish us to do nothing other than eliminate payday lending, which anyone reading your statement can extrapolate…that’s not possible.”

CFA President Jean Fox was asked several times by both Democrats and Republicans to offer an alternative to short term, non-collateralized lending. She had nothing to offer. The Consumer Federation of America is simply AGAINST!

Too bad the Consumer Federation of America doesn’t make an effort to understand why consumers by the millions use payday loans and what criteria payday loan businesses implement to determine if a consumer qualifies for a payday loan.

A recent “Position Paper” offered by CFA erroneously makes the point of stating that, “Given the lower bank account penetration rate for minority consumers,  this payday loan product undermines progress being made to unbanked consumers into mainstream financial services.”

Consumer Federation of America WAKE-UP! Educate yourselves first!! Payday loan consumers MUST HAVE BANK ACCOUNTS TO QUALIFY FOR A PAYDAY LOAN! Of course they must have a job also in order to pay us back.


Payday Loan Collection Scam – Vultures on the Prowl

Payday Loan Collection Scams

If you’re one of the millions of payday loan consumers out there, BEWARE!

Collection company agents are scamming payday loan users out of their hard earned cash.

The Kansas Attorney General, Steve Six, reports that Kansas residents are complaining about collectors calling with claims that the consumer took out an Internet based payday loan and never repaid it.

There are unsubstantiated claims by residents of other states as well.

Some of these payday loan collection agents are posing as law enforcement officers! It’s not uncommon for these collectors to threaten consumers with jail.

Payday loan consumers should be aware that their is no debtor’s prison in America.

These scam artists often identify themselves as ACS, National Affidavit Processing Department and United Financial Crime Division. The calls may be originating offshore.

It’s not unusual for the payday loan collection agents to have the ability to provide their victims with personal data including social security numbers and bank account information; even computer IP numbers.

Western Union appears to be the preferred method of payment requested of the consumers.

If contacted, consumers should demand a written notice specifying the amount of the debt, the name of the payday loan company, contact information of the payday loan company, and validation of the debt.

We advise the consumer to immediately determine if the payday loan company is licensed in the consumer’s state! If not, do not pay!

One last point; our readers should not conclude that these collection scams are singularly focused on the payday loan industry. These vultures ply their wares in virtually every financial product offered in the marketplace today.


OLA-Online Lenders Alliance Internet Payday Loan Lenders Association

The OLA, Online Lenders Association-a payday loan organization comprised of Internet Payday Loan companies, placed advice about contributing to the Haiti Relief Program.

From their web site: ”

We have all seen and heard about the devastation in Haiti.  As an organization and an industry who knows the hardship of people in need, we wanted to bring you some information about donating to the relief effort.

Congressman Meek has directed us to the InterAction website which lists multiple charities to whom you may wish to contribute.  Click InterAction to access their webpage.

We have been advised that the best way to help is to donate financially to organizations responding to a disaster.  Cash donations allow relief professionals to procure exactly what is needed in a disaster situation and ensure that donations are culturally, dietary, and environmentally appropriate.

You can also click Red Cross to go directly to their donation page.

You can donate $10 to the Red Cross and have it charged to your cell phone bill by texting “HAITI” to “90999.” (There will be no processing fees).”

The Online Lenders Association organized in an effort to provide a sense of standards and guidelines for Internet based payday loan lenders.

As the Online Lenders Association OLA web site states, “All member companies have agreed to a List of Best Practices and Code of Conduct developed by OLA to ensure that consumers are fully informed and fairly treated and are using all lending products and practices responsibly.”


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.

Need help bringing your business online? Everything you need to know
about payday loans and the Internet. Software, Licensing, Startups and more.

“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?


Payday Loan Industry QC Holdings Fourth Quarter Results 2008

Payday loan, installment loan lender, buy-here-pay-here (BHPH)  operator QC Holdings Inc. reported revenue growth of 8% for a strong fourth quarter 2008.

About QC Holdings, Inc.

Overland Park, Kansas based QC Holdings, Inc. is a provider of short-term loans in the United States, operating 585 branches in 24 states at December 31, 2008. Having 25 years of operating experience in the retail consumer finance industry, the company entered the short-term loan market in 1992 and, since 1998, has grown from 48 branches to 585 branches through a combination of de novo branches and acquisitions. During fiscal 2008, the company advanced approximately $1.4 billion to customers and reported total revenues of $227.7 million.

“Our fourth quarter results were a nice finish to 2008,” said QC Chairman and Chief Executive Officer Don Early. “Despite the obvious economic headwinds, our field personnel contained losses while improving revenues and minimizing operating expenses. This effort produced a 15% growth in pre-tax income quarter-to-quarter.

Highlights for the fourth quarter included:

  • Income from continuing operations of $4.0 million, or $0.22 per diluted share;
  • Income from continuing operations of $4.3 million, or $0.24 per diluted share, exclusive of governmental affairs expenditures in connection with 2008 ballot referendum initiatives in Arizona and Ohio (“2008 referendum expenditures”), compared to $3.8 million, or $0.20 per diluted share in fourth quarter 2007;
  • An 8.0% increase in revenues to $61.1 million compared to $56.6 million in fourth quarter 2007;
  • A 5.4% improvement in gross profit from comparable branches (defined as those branches that were open for all of the two periods being compared) over prior year’s fourth quarter; and
  • Adjusted EBITDA, which is earnings before interest, taxes, depreciation, amortization, charges related to stock options and restricted stock awards, and non-cash gains or losses associated with property disposition, of $11.1 million.

** QC Holdings Fourth Quarter 2008**

Total revenues increased $4.5 million quarter-to-quarter, primarily due to higher installment and automobile loan volumes. QC holdings originated $341.0 million of payday loans during fourth quarter 2008, a slight increase over the $339.8 million during fourth quarter 2007. Installment and automobile loan volumes totaled $12.4 million for fourth quarter 2008 versus $9.0 million in prior year’s fourth quarter.

Revenues for comparable branches (those branches that were open for the 15 months since September 30, 2007) increased 2.5%, or $1.4 million, to $57.1 million during the three months ended December 31, 2008. This increase is primarily attributable to growth associated with branches added in 2005 and 2006.

During the three months ended December 31, 2008, the company reported an increase in loan losses to $17.3 million compared to $15.7 million in the same 2007 period. The loss ratio for the current quarter totaled 28.4%, up slightly from the 27.8% in fourth quarter 2007. This small increase reflects a more difficult collections environment. Comparable branches totaled $16.5 million in loan losses during the quarter, which was approximately $500,000 higher than prior year’s fourth quarter.

The company’s revenues grew $16.1 million, or 7.6%, to $227.7 million during the year ended December 31, 2008 versus 2007 as a result of increases in the number of customer transactions (particularly installment and automotive loans) and average loan size.

“As we move into 2009, the sour state of the economy and markets continues to pose challenges. With consumer spending and confidence deteriorating, revenue improvements are unlikely for our core short-term lending branches. Furthermore, such an environment is particularly challenging to the collections process.

“Fortunately, we have a 25-year history of adapting to negative circumstances by responding to customer behaviors in creative, efficient, disciplined and profitable ways. We look forward to adding to that track record during this historically unusual period of time and to solidifying our position as a premier provider of short-term consumer credit.”

For complete financials and additional related QC Holdings results for the fourth quarter 2008, view the press release issued by QC Holdings at:

http://www.qcholdings.com/  click on Investment Center