Industry Rules Seek to Quell Growing Legislation Restricting PayDay Lending

In the wake of growing legislation restriction payday lending, the Community Financial Services Association of America (CFSA), a national trade association representing the majority of payday loan, check cashing and related community financial services locations in the United States, recently announced voluntary changes to its industry best practices.
Key components of the best practices include:

  • Offering payday loan customers the option of an Extended Payment Plan if they find they cannot repay their loan when due, allowing them to repay the loan over a period of additional weeks.
  • Encourage Consumer Responsibility Requires members to implement procedures to inform consumers of the intended use of the payday advance service. These procedures will include the placement of a "Customer Notice" on all marketing materials, including all television, print, radio and on-line advertising, direct mail and in-store promotional materials.
  • Placing a "Customer Notice" on all CFSA member-company advertising and marketing materials, advising customers that: "Payday advances should be used for short-term financial needs only, not as long-term financial solutions. Customers with credit difficulties should seek credit counseling."
  • Banning advertising that promotes the payday advance service for frivolous purposes such as gambling or travel and prohibits members from advertising payday lending services in any false, misleading, or deceptive manner.
  • Requiring CFSA members to prominently display the CFSA seal to help customers identify responsible providers that adhere to these and other CFSA Best Practices.

CFSA member companies are required to integrate these new practices into their business operations over the next three to five months. To ensure compliance with the Best Practices, CFSA has hired an independent firm, Global Compliance, to conduct audits of member company store locations.

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