The Texas Organization of Financial Service Centers (“TOFSC”) is:

An Industry Trade Association mainly comprised of small and mid-size business owners in Texas who offer short-term, small-dollar loan services.  You may be more familiar with our industry and it’s more commonly referred to name “The Payday Loan Industry.”  In fact, that term is loosely (not really accurate) used to describe many kinds of financial services that exist in the U.S. market, such as Check Cashing, Auto Title, Payday, and Installment Loans.  Titles aside, it is most important to understand that our Association members are in business to provide a needed service to Texas citizens.

The “Payday Loan” in Texas:

Members of TOFSC are small business owners in towns spanning across the State of Texas.  We are licensed “Credit Access Businesses” and are legal business owners dedicated to maintaining the highest level of compliance with the Regulations of the Texas Office of Consumer Credit Commissioner.  Many of our Members sit across the desk from our customers and providing loan services them directly.  Our customers value us and we treat them fairly.  In fact, in 2015 over 1.6 million Texas consumers used our services.  Complaint averages each of the last two years have been under 500 per year.  That is a per loan customer complaint % of .0003125%.

Banks and Other Industries causing larger scale problems:

Banks earn a reported $30+ billion per year in Overdraft and NSF charges from the same customers the Payday Industry serves.  The Payday Industry earns less than $9 billion per year industry-wide.  Even though we are a much smaller industry in terms of revenue, banks have gotten a pass while the Payday Industry has taken the full brunt of the media and Consumer Advocate onslaught.  And, when the same APR% calculation methods are applied to bank NSF and Overdraft charges they can be as high as 1,600% which is 2-3 times greater than many Payday Industry products.  Many Consumer Advocates suggest the banks should be the saviors of what they call the “payday loan problem,” but the truth is the amount of money the banks earn from our shared customers should be more heavily scrutinized.

The Annual % Rate (“A.P.R.”) Issue:

The citation of the triple digit A.P.R. %’s that many of our products carry is the easiest and most frequent argument used against us by the media and Consumer Advocates.   It is very true that our industry’s products can be expensive for consumers – this fact is always disclosed to customers before and throughout the loan process.  However, opponents of our industry rarely if ever discuss the extremely high defaults and fraud %’s that must be absorbed to maintain profitability.  After subtracting bad debt, rent, payroll, and other basic operating expenses, our small business owners are focused on simply making a profit no different than every business in Texas.

Significant regulations are already in place despite suggestions otherwise by the News Media: 

The States have decades of experience in dealing with our industry and already have many helpful regulations in place.  In Texas, the Office of Consumer Credit Commissioner conducts examinations continually, where each licensed business is taken through an 80+ point examination checklist.  Consumer loan documents used in Texas include compliance with a long list of key Federal and State regulations such as: Truth in Lending Act, Military Lending Act, Fair Debt Collections Practices Act, Unfair and Deceptive Trade Practices Act, and Fair Credit Reporting Act.  Arbitration and dispute resolution is offered, Privacy Policies are in place, and customers are given the “Right to Rescind” for up to three days.

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.

CAB Consulting and Brokerage is positioned to become the go to source of information and expertise for Texas CSO’s to transition to the new CAB, or Credit Access Business, model. CAB Consulting and Brokerage is reaching out to small and midsize payday loan operators to implement a transition plan so by January 1, 2012 their businesses are compliant and licensed. In addition, CAB Consulting is focused on creating an industry association for its clients to become a powerful voice in local, state, and federal arenas where payday loan ordinances and regulations are considered.

Why? Small and midsize payday loan operators must band together to become a faction strong enough to voice their specific needs, which are different than that of the larger companies who have extensive budgets for attorneys and lobbyists.

CAB Consulting and Brokerage knows all the details required by the Texas legislature to ensure compliance of CABs. A new CAB license will require a new application and thorough checks into your company in order to continue business. More detailed information than required on the CSO application is required to become a CAB and approval must be obtained in order for current businesses to operate legally after January 1, 2012. In addition, CABs must file quarterly reports, so by April 2012 all transactions will be under review by the state. CAB Consulting will organize and file the necessary paperwork prior to January 1, 2012, and will ensure that quarterly reports are filed completely and on time for its clients.

CAB Consulting and Brokerage principal, Michael Brown, has been in the payday loan industry since 2003. He has recently met with rule makers and legislators in Austin, and has partnerships with key players and attorneys to support your business transition.

Don’t get bogged down by the details. Contact CAB Consulting and Brokerage at 214-293-8676, or via email at cabconbrokerage@gmail.com and let them handle all the details so you can continue to do business in Texas.