Loan consumers can now breathe easier because the CFSA or the Community Financial Services Association of America pledges to implement their Best Practices to protect them against predatory lenders.
CFSA firmly believes that payday installment loan transactions should be conducted in a safe and responsible manner. CFSA members are obligated to abide by mandated industry Best Practices that ensure responsible conduct among payday installment loan lenders, protect loan consumers’ rights and encourage self-governance of the payday loan industry.
Best Practices require the lender to display fees in large type on posters in all store locations and offer customers the option of an Extended Payment Plan, at no additional charge, if they cannot repay their payday installment loan when due. Most CFSA member loan companies are required to comply with industry Best Practices that ensure consumer protections and responsible lending to all loan consumers. As a condition of membership, members must abide by all CFSA Best Practices and pledge their commitment to them annually.
Furthermore, member loan companies are required to affix the CFSA Member Seal to the window of each store and prominently display CFSA Best Practices on counter cards. Members are also required to provide new loan consumers with a ‘Your Guide to Responsible Use of Payday Loan’ brochure, both in English and Spanish.
Here are some of the Best Practices Guidelines implemented by the CFSA:
1. FULL DISCLOSURE.
A member will comply with the disclosure requirements of the state in which the payday installment loan office is located and with federal disclosure requirements including the Federal Truth in Lending Act. A contract between a member and the loan consumer must fully outline the terms of the payday installment loan transaction. Members agree to disclose the cost of the service fee both as a dollar amount and as an annual percentage rate (“APR”). A member, in compliance with CFSA guidelines where they do not conflict with applicable federal, state or local requirements, will further ensure full disclosure by making rates clearly visible to loan consumers before they complete the transaction process.
A member will comply with all applicable laws and not charge a fee or rate for a payday installment loan that is not authorized by state or federal law.
3. TRUTHFUL ADVERTISING
A member will not advertise the payday installment loan service in any false, misleading, or deceptive manner and will promote only the responsible use of the loan service.
4. ENCOURAGE RESPONSIBILITY FROM LOAN CONSUMERS
A member will implement procedures to inform loan consumers of the intended use of the payday installment loan 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.
5. EXTENDED PAYMENT PLAN
Each member will provide loan consumers who are unable to repay a payday installment loan according to their original contract the option of repaying the loan over a longer period of time. Such an extended payment plan will be offered in compliance with any requirement in state law to provide an extended payment plan or, in the absence of such a requirement in state law, in compliance with the Best Practice “Guidelines for Extended Payment Plans.” A member will adequately disclose the availability of the Extended Payment Plan to its loan consumers.
These are the Best Practices guidelines created by the CFSA to protect loan consumers and to uphold the reputation of loan companies who are giving quality loan service.