Is the “Dallas Payday Loan Ordinance” for real?

Is the “Dallas Payday Loan Ordinance” for real?

by The CAB Man Texas on April 25, 2012

Wanted to get some dialogue going on the Dallas Payday Loan Ordinance, I have one client with stores in Dallas proper who I am looking at it with.  Talked with some other folks who have a position within city limits and also talked to City of Dallas, have a call into some council members as well.

Here’s what I know:

Last year the City of Dallas passed an ordinance that attempts to regulate Payday Loan businesses.  This was passed within a week of the Texas laws related to Credit Access Businesses, and at that time a trade group named CSAT which is comprised of several of the larger players in the market filed an injunction.  I have not been updated on the injunction since last July.   Dallas is moving forward and has licensed 20 businesses, another 18 are pending.

Some basics of the ordinance that supposedly went into effect on January 1:
-Get a permit, pay $50
-Cannot loan more than 20% of gross monthly income on Payday Loans
-Auto Title Loans cannot exceed 3% of gross annual income
-Installment programs no more than four payments, must paydown 25% of principle with each payment
-Refinances are limited to 3
-Loans made less than 7 days after a payoff are considered a refinance
-Max of $500 for violations

My opinion  along with many others is that the Dallas City Council / City of Dallas is exceeding their jurisdiction when citing restrictions on the ways in which a business can offer its products or services.  The OCCC has done an excellent job with implementing the new CAB program and they are well equipped to do so.   Dallas, ahem, not so much.

 

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CFSA and Advance America file suit to end Operation Choke Point

CFSA and Advance America file suit to end Operation Choke Point

by The CAB Man Texas on June 6, 2014

Today in the news it came out that CFSA and Advance America filed suit to end Operation Choke Point.  Many CAB clients have endured a direct hit and have lost their deposit accounts with banks such as Wells Fargo.

The bad news that the depository account was being closed usually came in a very bland statement like this:  “Wells Fargo is no longer doing business with companies in your industry.”  No explanation as to why, only a letter and a deadline for the CAB to make other banking arrangements.

I am pleased to see that formal legal action is being taken to terminate this tactic from being employed any longer.  See the attachments for detailed information on what Operation Choke Point is, and for more details on the suit!

CFSA and Advance America File Lawsuit To End Operation Choke PointCommitte on

Oversight and Government Reform_Staff Report_Operation Choke Point

What is your opinion on this subject?  Submit comments or contact Michael Brown of CAB Consulting at 214-293-8676, or via email at Michael@CreditAccessBusiness.com.

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Examinations by the OCCC – show them you are tuned in!

Examinations by the OCCC – show them you are tuned in!

by The CAB Man Texas on August 6, 2012

Over the last 7 months CAB’s in Texas have evolved from a non-regulated space into the new CAB environment.  The OCCC has implemented its new way of doing things and there have been a few surprises along the way.

As a licensed Credit Access Business who has committed to learning the laws and made it a priority to study the rules outlining compliance, you are well on your way.   Do you have 100% confidence in how you have implemented Credit Access Business rules in your stores?  Have you talked with other friendly competitors about how they interpret the rules?   If you did, you might know that a preliminary round of OCCC examinations was performed.  There was some industry “buzz” from those examinations that gave many of us more of an idea of what’s to be expected.  The OCCC has been great to work with so far, for example what many would call their visits to your store an “OCCC audit”, they call an “examination.”  Seems to like a softer and friendlier term…

A commitment to gaining knowledge, operating legally, operating fairly, and exchanging information with peers is key to building confidence and securitizing your business.   So, how exactly might that be done?  Contact CAB Consulting and Brokerage!  We have created plans for our clients that create a simple approach to OCCC compliance.  CAB Consulting and Brokerage’s relationships across also put it in an ideal position to communicate recent developments and pass the latest “buzz” to your business.

Show the OCCC that your Credit Access Business is tuned in when their examination of your business goes smoothly and without any surprises.  Be an ideal CAB and get informed – make the OCCC’s job easy!   Start by contacting CAB Consulting and Brokerage to discuss how we might be able to go to work for you.  Reach Michael Brown at 214-293-8676 or via email at michael@creditaccessbusiness.com.

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Texas Organization of Financial Service Centers (“TOFSC”) Conference is 9/14

Texas Organization of Financial Service Centers (“TOFSC”) Conference is 9/14

by The CAB Man Texas on August 11, 2016

Today invitations to the 5th Annual TOFSC Conference are being sent out to Members, Sponsors, and Vendors, requesting their attendance starting at 10am on Wednesday 9/14.

We have chosen the Hyatt Regency Lost Pines for the venue this year, which is situated 20 minutes east of the Austin Bergstrom Airport near an 1,100 acre nature park called McKinney Roughs.

It is going to be a great setting and as always a great occasion for us to build relationships and do some learning.  Members are already sending in their attendance forms.  See below for links to the forms:

For Members: TOFSC.Conference.Invite.2016.Members

For Vendors / Sponsors: TOFSC Conference Invite 2016- Vendors

If you have any questions call or email Michael Brown, President of TOFSC, at 214-293-8676, or email him at: Michael@CreditAccessBusiness.com.

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What is the CFPB? Have you heard about it?

What is the CFPB? Have you heard about it?

by The CAB Man Texas on January 24, 2012

CFPB Basics

If you have not already, many of you may begin to hear about the “CFPB.”  The “CPFB” stands for Consumer Financial Protection Bureau.  This is a federal agency that was created in the aftermath of the US Economic Meltdown in 2008-2009.  The government felt that it was necessary to create this new bureau to monitor a broad range of businesses that contributed to the problem by not behaving in an appropriate manner, violating the law, or taking advantage of consumers.

“The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”The 3 priorities of the CFPB will to be Educate, Enforce, and Study.”

The scope of the CFPB will include the Payday Loan and Auto Title Loan industries.  It is a possibility that our industry will be faced with regulations on local, state, and federal levels.  The CFPB held a field meeting in Birmingham last week and has released an “Examination Procedures”document that illustrates how they plan to go about reviewing industry businesses.

If you would like to review the Examination Procedures document, it is available online, or you may request a copy from CAB Consulting and Brokerage.  Also, if you would like to view an intro to the Field Meeting last week, you can do so here: http://www.consumerfinance.gov/getting-a-complete-picture-of-the-payday-market/

Right now we are all focused on getting our new CABs off the ground and implementing new notices and disclosures.  Set your sights on the CFPB next quarter and take some time to become familiar with it.  CAB Consulting and Brokerage is gathering facts and will continue to provide information as it becomes available.

If you have questions, please feel free to call Michael Brown at 214-293-8676, or email cabconbrokerage@gmail.com

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Thank you for visiting Credit Access Business.com !

Thank you for visiting Credit Access Business.com !

by The CAB Man Texas on August 1, 2011

Are you a Texas CSO that is hungry for more information on the new license you’ll need by January?  You’ll need to evolve your CSO into the OCCC’s “Credit Access Business” model and we want to assist you in doing so.

Michael Brown may have contacted you or will be contacting you in regards to our Credit Access Business services.  Our areas of focus are Compliance, Capital, and Collections.

CAB Consulting and Brokerage Goals:

#1 – Learn more about your business and its unique needs.

#2 – Create a step by step plan to get to you compliant.

#2 – Provide you with options for operating Capital and 3rd Party Lenders.

#3 – Improve your Collections processes, and buy your Bad Debt.

We recently attended the OCCC stakeholder meetings and Austin and are informed on what is to come.  CAB Consulting and Brokerage is contacting CSO’s in Texas right now to share what we know, learn their needs, and discuss how we may be of service.

Please contact Michael Brown at 214-293-8676 to learn more today.  Or, email Michael at cabconbrokerage@gmail.com.

Thank you again for visiting Credit Access Business.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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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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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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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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