Payday Lenders Stronger Best Practices Go Into Effect
WASHINGTON -- Payday lenders that are members of the Community Financial Services Association have had to begin complying with the Association's revised best practices, which the CFSA says will better protect consumers in payday lending transactions.
"Consumers across the nation will be better informed and protected because of these important changes," said Darrin Andersen, president of the CFSA. "These changes represent another step in our ongoing efforts to respond to the concerns of policymakers and protect the financial well being of our customers."
The CFSA members control roughly half of the payday lending outlets in the U.S.
The enhanced Best Practices, required of all CFSA members, were first announced in February, but CFSA members were given until June 6 to integrate these new practices into their business operations, giving them reasonable time to change their advertising.
"As demonstrated by these changes, CFSA members are committed to holding themselves to a higher standard of responsible service" Andersen said.
As of the end of May, all CFSA members must place a customer notice on all advertising and marketing materials advising consumers to use payday advances for short-term financial needs only.
They must not use advertising that promotes the payday advance service for frivolous purposes such as gambling and
They are expected to prominently displaying the CFSA seal to help customers identify responsible providers that adhere to these and other CFSA Best Practices.
"These enhanced Best Practices, backed by our public education campaign and financial literacy programs, will help ensure that consumers make educated choices regarding payday advances," Andersen said.
The second stage of implementation begins on July 31, when CFSA members will be required to offer customers the option of an Extended Payment Plan if they find they cannot repay their loan when due.
To ensure compliance with the Best Practices, CFSA has hired an independent firm, Global Compliance, to conduct audits of member company store locations. Any company that does not comply with CFSA Best Practices will risk losing its membership, the association said.