It always surprises the typical, small (1-10 stores) payday loan operator to
learn a state regulatory agency is attacking one of the "big players" in our
industry. Generally, we are all under the assumption the "big guys" have
legal teams reviewing store procedures and compliance. Although there are
two sides to every story, and Check-n-Go has not yet responded, we can be
certain there is at least some justification for the action taken by the
Washington DFI.
State payday loan laws are always in flux. We are constantly attacked,
embraced, and attacked again. An interesting aside is the impact the payday
loan internet operators are having on the industry. More than one regulator
as implied they are more than willing to welcome payday loan internet
operators to the fold and will ease their ability to secure licensing and
nexus; a complete about face for the regulators. Of course, this is due
to the difficulties the regulators face in addressing the Internet operators
and the monumental number of consumer complaints emanating from payday loans
granted via the Internet. FISCA & CFSA are heading in the same direction. Recently they have
exhibited a very favorable attitude toward the payday loan Internet operators; a radical change!
We recall attending a FISCA convention in 2000 at the Atlantis where we were told by a FISCA board
member we "Internet outlaws would be in prison very soon". Now, the payday loan "big boys" are
scrambling for payday loan Internet knowledge.
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For a real eye opener regarding the size and number of transactions conducted via the Internet, we have it on some authority that at a recent "payday loan internet round table", one participant claimed they were purchasing 50,000 payday loan leads per day!
Bottom line, it is imperative every payday loan operator, big or small, make
certain they remain knowledgeable and up to date with all laws & statutes
affecting their business. Join industry trade groups, subscribe to Checklist
Magazine, use Burrell Printing, make yourself known by your congressional
representatives, attend trade shows, and communicate with your peers.
Another good source for payday loan laws, licensing and legislation is PaydayLoanLegislation.com
We receive calls on a daily basis regarding payday loans & the Internet. "Do I need a license"? This is not easily answered; at least not in this forum. The quick answer is dependent on your model, your ability to sleep at night, and your exit strategy.
For example, if you are astute enough to realize that there will come a time when you will want to retire or "cash out", then having payday loan licenses for the various states/provinces you fund will yield greater returns then not having appropriate licensing.
If you plan to "hit the PDL industry quick & hard", then move on to greener pastures, an offshore or unlicensed operation could make sense. You and your team will need to make that decision upfront. We cannot discuss the pros and cons here.
We, and several others, have found it advantageous to secure licensing, enter a market, feed internet oriented consumers to the appropriate fee structured web site(s) and enjoy the peace of mind and profits this model yields; in conjunction with our licensed stores.
Do not overlook the advantages of combining your "brick-n-mortar" with the Internet! The right payday loan software makes this very easy. Since your store is licensed you should serve all the payday loan consumers covered by your license; in other words, everyone in your state/province. And with the aid of collection data bases like CheckDataSystems.com you can safely increase your market share.
Another aspect of your strategy must address your available funds or "street money". Few, if any of us, have the ability to fund consumers in the entire USA, Canada, AU, etc., so why attempt to attack the entire continent? It only makes sense to focus on your niche. Your niche could be a particular profession, state(s) or province(s). Research the market, licensing requirements, collections procedures, demographics, competition... Do your homework first.
There is a lot of money still to be made in the payday loan industry. The right approach will yield you your share.
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