Just a reminder for all of you CABs out there – continually review your Consumer Transaction Information Disclosures & Fee Schedules.

Many times throughout the course of the year CAB operators may change their CAB fee amounts or offer different loan products such as offering multi-payment installment loans, payday loans, or auto title loans.  When changes are made and loan  products are dropped, added, or modified, we have seen the Fee Schedule & Consumer Transaction Information Disclosures be overlooked.

Take the time to ensure that your Consumer Transaction Information Disclosures & Fee Schedule are up to date with all of the products you are offering.  This is on the OCCC Examiner Checklist and Examiners will call you out on this.  Be an “A” student and get it right.

Additionally, per Texas Administrative Code 83.5004, if changes are made to your Fee Schedule or Consumer Transaction Information Disclosure, preceded versions must be maintained on site for a period of one year or until the next OCCC examination.

Here is the exact language regarding the retention of amended Fee Schedules & Consumer Transaction Information Disclosures:

For In-Store Transactions:

“In-store fee schedule and notices. The in-store fee schedule and notices required by Texas Finance Code, §393.222(a), and §83.6003(a) of this title must be available for inspection by the OCCC in a conspicuous location visible to the general public. If a licensee amends the in-store fee schedule or notices, it must maintain documentation of the previous versions of the schedule or notices for one year from the date of amendment or until the next examination by OCCC staff, whichever is later. The licensee may maintain the documentation of previous in-store fee schedules and notices at a centralized location other than the licensed location or branch office. In this case, the documentation must be maintained for one year from the date of amendment or until the OCCC’s next examination of the centralized location, whichever is later. However, upon the OCCC’s request, the licensee must have the ability to promptly obtain or access copies of the complete documentation so that the OCCC can examine it.”

For Online Transactions:

“Website and online disclosures. If a licensee maintains a website, it must make the website available to the OCCC for inspection. The website must include a fee schedule to show the licensee’s compliance with §83.6003(b) of this title, and applicable consumer disclosures to show the licensee’s compliance with §83.6007(f) of this title. If a licensee amends the website’s fee schedule, consumer disclosures, or method of accessing the fee schedule or consumer disclosures, the licensee must maintain documentation of the previous version of the website to show compliance with §83.6003(b) of this title and §83.6007(f) of this title. This must include the home page, any pages used in accessing the fee schedule and disclosures, and copies of the previously used fee schedule and disclosures. The licensee must maintain this documentation for one year from the date of amendment or until the next examination by OCCC staff, whichever is later. This paragraph does not require a licensee to maintain previously used pages of the website that were not the home page or pages used in accessing the fee schedule and consumer disclosures. The licensee may maintain the documentation of previous versions of the website at a centralized location other than the licensed location or branch office. In this case, the documentation must be maintained for one year from the date of amendment or until the OCCC’s next examination of the centralized location, whichever is later. However, upon the OCCC’s request, the licensee must have the ability to promptly obtain or access copies of the complete documentation so that the OCCC can examine it.”

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.

I know of many Credit Access Businesses in the payday loan and auto title loan industry who are getting “dynamic” with the way they are thinking. It seems like wherever I go it is the buzzword. New ideas are in play, and it is a pivotal time in our industry life cycle.

Legislative and regulatory drama is in the air as a result of the Consumer Financial Protection Bureau (“CFPB”) recently announcing their examination plans. They remain and unknown which causes fear in some, while others are inspired to conceive those new ideas that challenge established norms, tear down paradigms, and force an evolution into a new era.

Consumer need will not wane, it will continue to grow and become more sophisticated. So should your business!

What do you think “Dyanamic” means? Here are two definitions I like:

dy•nam•ic/dīˈnamik/
Adjective: Characterized by constant change, activity, or progress.

Noun: A force that stimulates change or progress within a system or process.

For many who have been in the business awhile, you know that one yellow pages ad is not going to secure your business the way it used to. Online operators who used to buy a lead for $20 and get a loan funded from a phone call and a bank statement know very well that was the “olden days.” Dynamic minds have since went to work and an evolution took place – the changes named above are only two of many.

What questions should you be asking today so that you can put your business on the track to long term success? Here’s a few to get you going… Have you embraced the reality that you need to evolve? Are you thinking about the needs of the customer? Are you looking at ways to improve vertical integration? Do you have a brand? What’s the competition doing? What’s the industry trend? Are you fully engaging the compliance process? Would you feel confident if the OCCC took you through and examination today? Is your software and reporting where it needs to be?

Michael Brown of CAB Consulting and Brokerage can be reached for questions and comments at 214-293-8676, or via email at cabconbrokerage@gmail.com.

Yesterday the City of Houston passed a “payday loan ordinance.” The ordinance looks like the other ordinances in Dallas, Austin, San Antonio, and Austin.

The media and Houston City Council Members refer to the ordinance as Payday Loan or Payday Lending, but it also regulates Auto Title Loans, the term “Payday Loan” or “Payday Lending” is being used as an umbrella definition for the industry.

The Ordinance goes into effect on July 1, 2014. CAB Consulting and its clients have always been open to meaningful regulation of our industry. The same story has been told to the City Council by Consumer Advocate groups and the same boilerplate ordinance was passed. The 25% pay-down on principal is a major problem, the limit of 4 installments on multi-payment loans is a problem. Will likely cause an increase in defaults or increase in repossessed cars, something that neither Consumers or CABs want.

See below for the hi-lights on the Ordinance:

-CABs must register with Houston, cost $50.
-Registration Certificate must be displayed in plain sight.
-Certificates will be good for 1 year.
-Records must be kept for all transactions.
-Same basic records that are kept for Federal & OCCC Compliance will be required.
-OCCC Quarterly & Annual Reports must be kept on file.
-Records must be kept on file for 3 years.
-Cash advanced cannot exceed 20% of gross monthly income.
-Auto Title Loans may not exceed the lesser of: 3% of gross annual income, or 70% of the vehicle value.
-No more than (4) installments on multi-payment loans.
-Each refinance must include 25% payment towards the principal.
-No refinances on multi-payment loans.
-Single payment loans may not be refinanced more than 3 times.
-7 day cooling off period.
-Any new loan funded less than 7 days after a payoff is considered a refinance.
-Agreements must be written in customer’s language of preference.
-Every location must at least have agreements in English and Spanish.
-For every customer who cannot read, every agreement and disclosure must be read in its entirety to the customer in their language of preference.
-Forms with Referrals to Credit Counselors will be provided to Customers.

For more information, businesses affected by this Ordinance can contact the City of Houston Director of the Department of Administration and Regulatory Affairs.

Here is a link to the City of Houston “Payday Lending” Ordinance: Houston.Ordinance

Babin, DiNardo: State should not loosen payday lender regulations. Written by Anna M. Babin and Cardinal Daniel DiNardo. 

Let’s take a minute and dice up this Houston Chronicle piece on Texas Credit Access Businesses.  The newspaper was apparently not satisfied with their role in passing the Houston “Payday Loan Ordinance” which caused a massive amount of closures in the City.  They still take up this reckless cause with Consumer Advocate and Church Groups by giving them a full and open forum to wage the war against the businesses that offer these loans and the people who need them.  The Ordinance raises payment amounts.  How does that help?  And the Chronicle looks the other way when this article’s authors say they do not want to put us out of business? Are they saying that with a straight face or with a wink and a smile?

So here is something new.  The 180-day limit on loans is something that Rep. Dan Flynn asked the Attorney General to look at, as it can be a limiting rule that restricts credit in a way that is unattractive to consumers.  The article stated that “At the close of the 85th Texas legislative session, an opinion request was submitted to the Attorney General to loosen restrictions in the Texas Finance Code for payday and auto title businesses that would allow for payment of loans to go beyond the 180-day limit that is clearly stated in the law.”  It went on to also say that “If the limit is lifted, payday and auto title lenders will only be required to guarantee that the arrangement of the loan is completed in 180 days, essentially expanding the length of the loan payback period indefinitely.”

Here comes the artful stroke of the brush: “Opening the door to longer-term loans would be a “devastating” blow to the hard-working, lower-income Texans who use these loans to cover basic needs, such as food, shelter and clothing.”  No.  Longer term loans mean more time to pay the loan back and lower payments.  More time to pay back means more flexibility and ability for the average borrower to manage their finances.  Lower payments mean more choices and less defaults.  How exactly is that going to be “devastating?” 

And then the qualifying disclaimer: “Our goal is not to put the payday and auto title lending industries out of business, but to ensure that reasonable regulations are in place to protect those most in need of the loans.”  (Ok, riiiiggghhht.  Grownups know better unfortunately.  These people want us out of business.

Here is the deal – Texas Credit Access Businesses have to fight and scrap every single day against people who are working to put us out of business via “thoughtful, meaningful, modest, additional restrictions.” It comes from all angles across the State and media outlets like the Houston Chronicle take up the cause without any word from our side whatsoever.  So, what happens?  41% of Credit Access Businesses in Texas close in a 4-year period.  There were 3,500 in 2013 now there are about 2,100.  With this 180-day rule, it is an issue for us that would help our CABs and customers.

Are the people who wrote and supported this article satisfied with the successful implementation of “thoughtful, meaningful, modest, additional restrictions” in the Payday Loan City Ordinance? No way – they still offer up their opinions on websites and newspapers and enjoy a wide-open forum to instill their false narrative.  These groups will not be satisfied until loans are free and that is no endorsement of the “American Way,” it is more Socialism than anything else.

This article was written and supported by people who want to shut us down.  And for some more fun, check out the hypocrisy below, the United Way accepted money from Texas Credit Access Businesses, $30,000 in fact.  Yet they are one of the groups we have seen bring on the hate speech at multiple City Ordinance hearings at City Council meetings across the State. I mean they really go for it – they HATE us and want others to think we are the devil reincarnated!

• Anna Babin, President and CEO of the United Way of Greater Houston. (United Way accepted a $30,000 grant from Texas CABs! We can’t be all that bad, can we?)
• Cardinal DiNardo is a Cardinal overseeing the Archdiocese of Galveston-Houston.
• Stephen M. Fraga of Tejas Office Products Inc.
• Irma Diaz-Gonzalez of E.T.C. Inc.
• Lynne Liberato, chair of United Way THRIVE. (United Way accepted a $30,000 grant from Texas CABs! We can’t be all that bad, can we?)
• Ping Sun of Yetter Coleman.
• Dr. Steve Wells of South Main Baptist Church.

Here is the link to the press release about the $30,000 grants from Texas Credit Access Businesses to the United Way:

http://www.tfee.texas.gov/TFEE%20Grant%20Award%20Press%20Release.pdf 

Here is the link to the Houston Chronicle piece: 

http://www.houstonchronicle.com/opinion/outlook/article/Babin-DiNardo-State-should-not-loosen-payday-11209628.php

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.