Payday Advance Customers’ Frequently Asked Questions
What happens if I change my mind after taking out a payday advance?
CFSA member companies abide by Industry Best Practices that enable you to rescind the transaction at no cost before the end of the following business day by returning the full amount of the advance to the provider.
How often do most people use payday advance services?
More than half of all payday advance customers use the service six or fewer times a year, according to The Credit Research Center (CRC). Approximately 78 percent of those surveyed used the service between once a year and about once a month.
When an immediate, short-term need arises, CFSA member companies are there to help. Remember, a payday advance is not a long-term solution for ongoing budget management. Repeated or frequent use can lead to financial hardship. If you find yourself repeatedly falling short between paydays, it may be time to consider long-term credit solutions or credit counseling.
To obtain credit counseling services, contact the National Foundation for Credit Counseling. The NFCC is a national network of non-profit Financial Care Centers dedicated to helping people learn how to budget and use credit wisely. Call 1-800-388-2227 to find a center near you.
Is my transaction confidential?
CFSA member companies respect their customers’ privacy. Payday advance companies openly disclose their privacy policies and practices to customers and protect the confidentiality of customers’ personal information.
How is the advance amount determined?
The maximum amount of a payday advance is generally regulated by the state. In addition to falling at or below the state maximum, the amount of a payday advance is determined by the customer’s net income. Because payday advances are income based, sometimes customers are unable to borrow as much as they would like. Although it limits the amount of money a customer can borrow, this policy serves as an important consumer protection. Frankly, payday advance providers wouldn’t help customers if they were to lend them more money than they are able to repay.
How are fees established?
Our members’ fees are competitive and in compliance with applicable state or federal law.
Is my credit rating checked before I receive an advance?
No, your payday advance provider does not obtain a credit report from any of the three major credit bureaus. Unlike many other financial institutions, most payday advance companies do not require that you have a good credit rating or credit history.
Most CFSA member companies do, however, subscribe to a risk assessment service that indicates whether a potential customer is currently in payments to similar businesses. It may also indicate whether an applicant has cash advances outstanding with other companies that subscribe to the same service.
Is my payday loan history reported to a credit bureau?
Payday advances are not reported to traditional bureaus. However, some CFSA members offer customers the opportunity to report their repayments to an innovative credit-reporting agency, PRBC. PRBC tracks non traditional credit sources and scores payments of recurring bills such as rent, utilities, private mortgages, child care and other expenses.
Contact your payday advance lender to find out if it participates in CFSA’s PRBC program. To learn more about PRBC, visit www.prbc.com.
What happens if I don’t have the necessary funds to repay the advance on my due date?
Each company has its own collection procedures, but every CFSA member company is committed to collecting past due accounts in a professional, fair and lawful manner as required by our Industry Best Practices.
However, if your check is deposited and your bank returns it due to insufficient funds, you may be charged a returned check fee by your payday advance provider, if permitted by applicable law. You should also be aware that most financial institutions charge a NSF (Non Sufficient Funds) fee for a returned check and, in some circumstances, may revoke your checking account privileges.
Remember: You are responsible for full repayment of your account (including a returned check charge, when appropriate). Your payday advance company will contact you to collect the amount due and, if necessary, may turn your account over to a collection agency.
If my account becomes past due, will I face criminal prosecution?
No. In accordance with CFSA’s Industry Best Practices, member companies do not threaten or pursue criminal action against customers if a check is returned unpaid. If it becomes necessary and is appropriate, however, companies may seek civil remedies to collect past due accounts.
Can I renew, or roll over, my advance by just paying the fee again on my due date?
Some state laws allow rollovers, although most do not. Even in states that permit rollovers, CFSA member companies are limited to four rollovers or the state limit, whichever is less. Check with your local CFSA member company to determine your options.
Remember: Limiting rollovers is a consumer protection designed to ensure responsible, short-term use of the service. It is important that you fully evaluate the cost versus the benefit of rolling over a payday advance.
If getting a payday advance is such a simple and easy process, why is there so much information in the customer agreement?
The agreement you read and sign prior to receiving a payday advance is a contract that complies with all applicable state and federal disclosure requirements. It fully outlines the terms of the payday advance transaction including the cost of the service fee both as a dollar amount and as an annual percentage rate (APR). Full disclosure provides all the information needed to make an informed financial decision.
What can I do if I’m dissatisfied with the service I receive from a payday advance company?
If the lender is a CFSA member, it will have the CFSA Member seal affixed to its window. If you have a problem with the lender that is not resolved to your satisfaction and/or you feel that the company has violated a CFSA Best Practices, you may file a written complaint by writing CFSA at the following address:
Community Financial Services Association of America
515 King Street
Suite 300
Alexandria, VA 22314
or send an email to cfsa@multistate.com.
