(3) bills already posted ahead of the 85th Texas Legislative Session

(3) bills already posted ahead of the 85th Texas Legislative Session

by The CAB Man Texas on January 6, 2017

The 85th Texas Legislative Session starts on Tuesday, January 10, 2017.  At this point, (3) bills have been posted ahead of the session.  See below for information on the bills as well as a few comments.

Ramon Romero (D): HB 60

Relating to requiring a credit access business to verify the vehicle identification number used to obtain a motor vehicle title loan.  Before obtaining a title loan for a consumer, to physically inspect the vehicle used as collateral, photograph the vehicle identification number, and verify that the number matches the number on the title provided by the consumer. Requires the CAB to retain the photograph until the second anniversary of the date the extension of credit is made.

Comments:  This really is something that any decent operator will do anyway. Not sure why additional regulation is needed here.  CABs have a very long list of regulations they abide by so why is Mr. Romero wanting to add more?

 

Matt Schaefer (R): HB 153

Relating to the authority of a municipality to regulate occupations.  Prohibits a municipality from adopting any ordinance that: (1) establishes additional, more stringent licensing requirements for an occupation that requires an occupational license issued by a state licensing authority, or (2) requires a person to obtain an occupational license issued by the municipality. Provides that any ordinance violating this prohibition is void.

Comments:  Anything that will void the city ordinances related to payday, installment, and auto title loans makes sense.  The city ordinances have caused over 1,500 businesses to close and have caused thousands of people to lose their jobs who worked at those stores.  With the increased cost of doing business that resulted from trying to survive the ordinances, CAB owners had no choice but to increase rates and that has hurt consumers – it was that or go out of business.

 

Diego Bernal (D): HB 197

Relating to contracts and other documents issued by credit access businesses.   Requires the contract and other documents provided by a CAB to be: (1) provided before signing written in both English and Spanish, (2) written in plain language, and (3) printed in an easily readable font and type size. Requires the Finance Commission to adopt rules implementing this provision. Requires the CAB disclosure and notice to be available in both English and Spanish at each CAB business location.

Comments:  CAB consumer loan document packages are typically 25 pages – if you have to create document package in both languages that will be 50+ pages of documents, tons of ink, paper, and toner.  That will mean an increase in costs and slower processing times which will be a major concern for business owners and an inconvenience for the customer, and likely even higher rates.   Who decides what “plain” language is? Will all the current document packages have to be re-written?  What is “reasonable” font size?  I know 12 point font is required in the TILA disclosures but due to all the regulations and other disclosures that are required to be provided, CABs (and other entities like banks) need to shrink font as small as possible so the documents aren’t too long.  (remember 25 pages+ to start).  If you go 12 point font on a document that is mostly 8 point font it is going to cause the document to double in size.  50 pages in English, 50 pages in Spanish!  And, the CAB has to make copies of the signed loan documents for their files so that becomes 200 pages!  All that for a $300 loan?  If this one passes we should all get into the paper, ink, and toner business!

 

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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Investment Opportunities in the Payday Loan Industry

Investment Opportunities in the Payday Loan Industry

by The CAB Man Texas on September 23, 2011

With over 3,000 registered payday loan businesses and an overall population of 25 million people, Texas represents one of the most prolific markets for payday lenders in the industry.

Not only that, but there are many large metropolitan clusters in Texas surrounding the large cities Dallas, Ft. Worth, Houston, Austin, and San Antonio.  There’s a saying in Texas that when the weather is hot, there’s nothing else to do but shop and eat. A typical street corner in Dallas has at least two banks and two fast food restaurants, so consumers are invited to get money and spend money just about every waking moment. Texas highways and byways are set up to prime the capitalistic consumer engine and breed success in the retail business. Intercity freeways are gigantic advertising corridors for anyone who wants to hang out their shingle, making this market a hotbed for business owners.

One such business that has been the beneficiary of that formula is the payday loan industry.  What formerly was a little known product based in check cashing stores or pawn shops, has grown into a professional, regulated, and mainstream industry.  In 2010, it was at $40 billion.

With all the instability in traditional cornerstone investments like the stock market and real estate, many investors have taken a look at the payday loan industry as an option.  The industry is tuned to adapt to the idiosyncrasies of the cash strapped, credit challenged consumer.  Payday loan businesses were built by adapting to many of the problems that Wall Street cannot.

Are you looking for something new?  Are you growing weary of the daily picture that CNN shows you of the beleaguered NYSE trader looking down at his desk after yet another hard plummet of the market?

Consider becoming a lender in the Texas payday loan business.  Reach out to C.A.B. Consulting and Brokerage if you would like to look into it.  We would be happy to tell you what we know and connect you with businesses looking for people such as yourself with money to invest.

Contact C.A.B. Consulting and Brokerage at cabconbrokerage@gmail.com or call us at 214.293.8676.

{ 2 comments… read them below or add one }

steve July 6, 2013 at 9:08 am

Hi
I own and run a small property brokerage and I have heard there are some excellent opportunities to offer investment into payday loan funding. Is it possible to send me some details, and any details of commissions that would be payable.

Thanks

Steve

Reply

Anonymous August 10, 2013 at 7:37 am

Certainly Steve. Returns of 12% – 18% are conceivable depending on a number of factors. Lots of issues to consider. lets explore…

Michael

Reply

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Website Design to Ensure Compliance with the O.C.C.C.

Website Design to Ensure Compliance with the O.C.C.C.

by The CAB Man Texas on April 3, 2012

C.A.B. Consulting and Brokerage works with Texas Credit Access Businesses on their licensing, compliance, operations, and third party lender needs. Recently they partnered with Orangebook Website Design to offer Texas CAB’s dynamic websites at a discounted price.

Per its Rules for Credit Access Businesses, the O.C.C.C. asks that certain documentation (Consumer Disclosures, Licenses, Fee Schedules, and Notices) not only be displayed in-store but also on websites through which Texas CABs advertise their services. Orangebook Website Design has been educated on the regulations and will redesign or build a new website for your business that ensures compliance in the internet marketplace.

Orangebook Website Design is offering Texas CABs a greatly reduced price for a new website build. Orangebook Website Design has reduced the list price for a 5 Page website from $975 to $745 for C.A.B. Consulting and Brokerage referrals.

5 Page Features ($745)

  • Complete Custom Web Design (No Templates)
  • Home Page Flash Intro
  • Unlimited Design Revisions
  • Contact Page with Contact Form
  • Search Engine Friendly Web Site
  • Social Media Links to Facebook, Twitter, and MySpace
  • Dedicated Contact Personnel for Your Project
  • Free Online Payment Interface
  • You Own Your Web Design – Onetime Cost for Web Design

An 8 Page website originally priced at $1,540 is now reduced to $1,185 for C.A.B. Consulting and Brokerage customers.

8 Page Features ($1,185)

  • All Features Listed for the 5 Page Website Design
  • Unlimited Photo Galleries
  • Video Upload
  • Unlimited Slide Shows
  • PDF File Download

Website redesigns start at $595 and include all the features of a new website build. E-Commerce Websites are available at a reduced rate of $1,775, and, in addition to all the listed features for website design, includes a Shopping Cart System.

Website Hosting services are also available through Orangebook Website Design:

Basic Hosting ($37.50 a month)

  • 24/7 Web Maintenance
  • Unlimited Changes
  • SEO
  • Contact Management System

Premier Hosting Services ($89 a month)

  • Development of a Marketing Plan
  • Organic SEO
  • Content Development
  • Web Analytics and Analysis (evaluate weekly/monthly web traffic)

Orangebook Website Design provides personal website design services and has a portfolio of current websites, which include a wide variety of industry. Contact Orangebook Website Design at 949-715-5676 to further discuss the C.A.B. Consulting and Brokerage Website Design Discount.

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ACH Processors are shutting down licensed operators too

ACH Processors are shutting down licensed operators too

by The CAB Man Texas on August 29, 2013

Many of you know there have been some recent ACH payment processor problems that have developed in our industry. In particular, online operators are being hit the hardest. I had (2) clients check in with me this morning regarding the shutdown of their ACH capabilities.

I was surprised to see them shutdown, as clients of CAB Consulting are licensed businesses. It has been my understanding that only unlicensed and unregulated online payday loan companies were the targets of these shutdowns, not compliant and legal licensed operators. It appears ACH companies are having a knee-jerk response and are suspending services first, then asking questions later.

If you have been impacted by this, there are some options in the market that I can tell you about. Also, check in with your ACH provider to to make sure you are informed about where things are now, and to avoid being blindsided.

Contact Michael Brown at CAB Consulting, 214-293-8676, or Michael@CreditAccessBusiness.com.

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Bank Fees are rising and so is use of Alternative Financial Services – coincidence?

Bank Fees are rising and so is use of Alternative Financial Services – coincidence?

by The CAB Man Texas on August 14, 2012

I was reading this CNN Money.com article today: http://money.cnn.com/2012/08/13/pf/bank-fees-rise/index.html

This is an issue that I am very familiar with and the result is more customers for Texas Credit Access Businesses.

Monthly service fees on accounts with balances below $5,000 are the banks targets for the monthly service charges, which certainly fits the low and middle income profile of the typical payday consumer. And, don’t forget that NSF and Overdraft fees at many banks are have drifted up into the $35-$40 range.

Options like pre-paid debit cards are becoming more attractive compared to the bank branch, and in many cases the pre-paid cards offer more ideal online account management and smart phone capability, all with lower monthly service charges.

Consumers are learning there are more convenient and less costly options out there, and a migration towards cutting edge alternative financial services is happening. Shape your business accordingly, get creative, and stay convenient!

I refer to the information below very often in conversations – it is published by FISCA and illustrates the real deal on banking related charges versus payday advances – the APRs are less in many cases! Be sure and have these statistics ready the next time the APR topic comes up – and then nail it.

$100 Payday Loan (14 days) = $22.88 Fee (596% APR)
$100 Overdraft Protection = $29.00 Fee (756% APR)
$100 Bounced Check = $54.87 Fees (1,431% APR)

Sources:
(1) Bankrate.com, 2007 Courtesy Overdraft Study – based on average first draft
(2) Average NSF fee $28.23 (Bankrate.com, 2007 Checking Study), based on average first NSF charge, and average merchant return check fee of $26.64 (2006 CFSA fee survey).

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Legislative Session: (3) bills as of last week, this is the 4th

Legislative Session: (3) bills as of last week, this is the 4th

by The CAB Man Texas on January 12, 2017

New bill: HB 877, from Chris Turner (Democrat out of Tarrant County, Represents Grand Prairie & portions of Arlington).

Caption: Relating to prohibiting certain telemarketing calls by a credit access business.
A credit access business or a representative of a credit access business may not make a telemarketing call, as defined by Section 304.002, Business & Commerce Code, to a consumer whose name and telephone number are on the Texas no-call list maintained under Subchapter B, Chapter 304, Business & Commerce Code.

The full text of the proposed bill mentions that you would be able to contact consumers with whom you have had done business with in the past, so long as it has not been more than 1 year since the last transaction.

Comments:  Our clients and Members to not typically “telemarket” or use outside telemarketing firms.  We are not aware of many CABs who do this but would be interested to see how “telemarketing” is defined.  Stands to reason that if someone has asked not to be telemarketed to that they are not telemarketed to.  Not sure why it is worth the effort to put this bill out.

Link: http://www.capitol.state.tx.us/Search/DocViewer.aspx?ID=85RHB008771B&QueryText=%22credit+access%22&DocType=B

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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The infamous and continuously failing Texas Payday Loan City Ordinance.

The infamous and continuously failing Texas Payday Loan City Ordinance.

by The CAB Man Texas on August 22, 2017

Since Texas cities began passing the infamous and continuously failing Texas Payday Loan City Ordinance there has been a decrease of 1,300 or so licensed locations inside the State.  According to the most recent OCCC licensee totals, this represents a 37% market shrink.  The results have been a shuttering of businesses in Texas, a loss of thousands jobs, a loss of real estate rents, and decrease in property tax revenues.  Rates have increased 12% in Ordinance cities and demand for unsecured short term credit has largely remained the same.  This is a cold hard truth that was laid out in City Council meetings when we were asking for a “No” vote on the Ordinance.  Is an “I told you so” in order here?

2017 has been a rough year for the Ordinance though, many cities are now bucking the trend and have voted the Ordinance down.  As well, the City of Austin got the double slam-dunk in their simultaneous loss to Speedy Cash and Advance America City Ordinance lawsuits in April.  Those two cases were around a year in the making I wonder if the taxpayers of Austin feel good about the time and expense the City put into an issue that results in a .000153% complaint to loan ratio for Texas residents?  I live in Austin and things are tight budget-wise in this City, despite all the stories you hear about growth it has some problems that should be commanding the attention of city leadership other than the payday industry.

So here comes the next whammee – I was reading over the OCCC’s 1st quarter MSA report for 2017 and it says that 10 of the 2,200 reporting licensees generated 33% of the single payment loan volume, and get this, those 10 licensees were OUT OF STATE!  As far as installment loans go in Texas, 16 OUT OF STATE licensees funded over 37% of the 271,189 installment loan and refinance transactions in the 1st quarter of 2017.  Yes, these are out of state online lending companies who are licensed to do business in Texas but are not within the jurisdiction of any City.  That makes them free to let the market decide and boy did the market ever decide.  On either of the products mentioned – the out of state licensee group was the largest “market” in Texas.  The next biggest markets down were Houston and Dallas but it wasn’t even close to the out of state operators.  Check out the report for yourself below.

Here is a link to the MSA report: http://occc.texas.gov/sites/default/files/uploads/reports/cab-q1-msa-2017.pdf

Imagine if the Payday Loan City ordinance did not force the closure of all of those locations in Texas!  All of that businss would be taking place here in Texas.  Kudos to the online guys who are meeting the need but for obvious reasons we need to work to get those customers back!  I bet the OCCC wishes they had that extra $800,000 per year in licensing revenue.  And how about that $300,000 per year in contributions to the Texas Educational Endowment fund that is now lost?

The full ugliness of the Payday Loan City Ordinance is now beginning to show in the light.  Please pass this information along to your City Council the next time this issue comes up in your market – we are positioned to deliver the facts to them quickly and efficiently so that they can have the full story and move on to the next issue which will be much more meaningful, no doubt!

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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The online marketplace is booming and the brick & mortar store must adjust by increasing web presence and using alternative data.

The online marketplace is booming and the brick & mortar store must adjust by increasing web presence and using alternative data.

by The CAB Man Texas on April 9, 2019

We have been hearing a lot lately about the continued decline of retail business in the US.  Zales and Jared jewelry retail stores are the latest to announce closures of hundreds of locations.

Online is booming and it seems like Amazon rules the world.  If your business does not have an online presence you are missing out on a lot of opportunity because your pure brick & mortar market is shrinking by the minute.  Consumers are evolving and many low to middle income consumers are willing to do more and more to get access to credit at crucial times.  How will you engage with this new dynamic?

Forbes.com featured an article that discusses how increased online markets are opening a consumer’s willingness to share their personal info online while also touting the strengths of today’s alternative data.  I included some excerpts below.

“People Are Plenty Willing To Share Personal Data To Get A Better Loan.”

  • New research suggests that people are surprisingly comfortable sharing their data as long as it’s being put to good use, especially in the world of lending.
  • A recent Harris Poll found a surprising consensus among American adults — 71% of those surveyed said they would be willing to share more personal data with a lender if it led to a fairer loan decision.
  • More significantly, the Harris Poll shows that the majority of consumers feel unfairly treated by the current system.  More than 80% of African-Americans and Hispanics – and 7 in 10 of all adults – say they wish there were a better way to prove themselves to lenders.
  • But in today’s era of large-scale data collection and unlimited computing power, the traditional credit score is showing signs of age and mathematical limitations.
  • Consider some of the things credit scoring excludes: your job history, your roots in your town and thousands of other bits of information that are left untapped. It’s no wonder 70% of people polled say it’s difficult to get financial institutions to see them as anything but a number between 300 and 850.
  • One-third of renters say credit scores have kept them from buying a home.   
  • Alternative data simply means anything that’s not included in calculating a traditional credit score. It could include timely utility payments, history of holding down a job, even large debts you had years ago (outside of the traditional credit score models) that you successful paid off.
  • Bringing that added data into the credit scoring decision creates a more nuanced picture of borrower risk, helping banks spot worthy borrowers further down the credit spectrum (and flagging troublesome borrowers who look good on paper).
  •  The Omidyar Foundation found that in the six biggest emerging economies, using more data and machine learning techniques can get as many as 580 million unbanked people into the financial mainstream.”

Many of us are using “alternative data” with Factor Trust and Microbilt (often referred to as “Credit Reporting Agencies” or “CRA’s”).  If you are not, get on it as soon as possible!  

Factor Trust was recently acquired by Trans Union, and another CRA “Clarity Services” was acquired by Experian awhile back. In the future hopefully that will mean better things for how CRA’s are utilized by our industry and will also mean more robust access to credit for consumers.”

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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Can CSO-CAB’s Offer Multi-Payment Auto Title Loans for more than 180 days?

Can CSO-CAB’s Offer Multi-Payment Auto Title Loans for more than 180 days?

by The CAB Man Texas on April 12, 2012

A client of mine and I are seeking opinions on the 180 day limit on CAB multi-payment auto title loans Per Texas Finance Code Chapter 393.201 (Form and Terms of Contract) and Chapter 393.001 (3).

Chapter 393.201 states that a credit service contract is between a CSO-CAB and a consumer, and that the services to be performed under that contract listed under 393.001 (3) must be completed within 180 days.  Many operators interpret this rule simply, and say “this means we can’t participate in multi-payment loans for more than 180 days.”

But, my client is thinking that the promissory note component of the contracts is between the Third Party Lender and the consumer, is not related to the rules just cited, and so 393.201 should not apply.

Why?  The client’s CSO-CAB services to the customer are almost all completed on day 1 of the loan.  After that such services as taking payments on the loan, forwarding the payments to the lender, and guaranteeing the loan, are services provided by the CSO-CAB to the lender, and not the consumer.  So, again 393.201 should not apply because these are not the service listed under 393.001 (3).  The service of assisting and obtaining loans for the consumer as per the credit service contract are done well within the 180 days.

#1 priority for client is to abide by the rule of the law…please provide your comments on this we are seeking OCCC and industry opinion.

There are many benefits to my client and the consumer for loan programs that are beyond 180 days.  Let’s dig a little on this.

As always, check in with Michael Brown via email at cabconbrokerage@gmail.com or call 214-293-8676.

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Credit Access Business rules for 2017 that you need to know!

Credit Access Business rules for 2017 that you need to know!

by The CAB Man Texas on January 13, 2017

New Technical Rules for 2017 you should be aware of.  Did you know there are new rules related to the application for new licenses, transferring a license, and criminal history of CAB owners?  Much of this was covered during CAB Consulting’s “CAB II” project that many clients and members took advantage of. 

*The language for rules and transfers removes the part mentioning that you need to wait on the OCCC’s approval to operate a CAB while the license is being transferred. The transformer assumes all responsibility of the license until the license has been transferred to the transferee. 

**Criminal History can affect license holders. This affects anyone with a State license from a concealed handgun license to a Credit Access Business license. In the eyes of Texas, it is a privilege to maintain a Texas license, and therefore license holders must be law abiding residents.  

Here are several areas of infraction that could compromise your CAB: 

Theft, assault, any offense that involves misrepresentation, deceptive practices or making false or misleading statements. 

Any offense that involves breach of trust or other fiduciary duty.

Any criminal violation of a statute governing credit transactions or debt collection. 

Failure to file a government report, filing a false report or tampering with a government record. 

Here is a link to the rules: http://occc.texas.gov/sites/default/files/uploads/pub/rules/cab-adoption-fc-010517.pdf 

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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