Best Practices for the Payday Advance Industry
CFSA members must abide by the following Best Practices:
- Full Disclosure. A member will comply with the disclosure requirements of the state in which the payday advance office is located and with Federal disclosure requirements including the Federal Truth in Lending Act. A contract between a member and the customer must fully outline the terms of the payday advance 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 customers before they enter into the transaction process.
- Compliance. A member will comply with all applicable laws. A member will not charge a fee or rate for a payday advance that is not authorized by state or federal law.
- Truthful Advertising Revised. A member will not advertise the payday advance service in any false, misleading, or deceptive manner, and will promote only the responsible use of the payday advance service. (Effective 5/31/2007) CFSA members click here for guidelines. »
- Encourage Consumer Responsibility Revised. A member will 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. (Effective 5/31/2007) CFSA members click here for guidelines »
- Rollovers. Members shall not allow customers to rollover a loan (the extension of an outstanding advance by payment of only a fee) unless expressly authorized by state law, but in such cases where authorized the member will limit rollovers to four (4) or the state limit, whichever is less.
- Right to Rescind. A member will give its customers the right to rescind, at no cost, a payday advance transaction on or before the close of the following business day.
- Appropriate Collection Practices. A member must collect past due accounts in a professional, fair and lawful manner. A member will not use unlawful threats, intimidation, or harassment to collect accounts. CFSA believes that the collection limitations contained in the Fair Debt Collection Practices Act (FDCPA) should guide a member's practice in this area.
- No Criminal Action. A member will not threaten or pursue criminal action against a customer as a result of the customer's check being returned unpaid or the customer's account not being paid.
- Enforcement. A member will participate in self-policing of the industry. A member will be expected to report violations of these Best Practices to CFSA, which will investigate the matter and take appropriate action. Each member company agrees to maintain and post its own toll-free consumer hotline number in each of its outlets.
- Support Balanced Legislation. A member will work with state legislators and regulators to support responsible legislation of the payday advance industry that incorporates these Best Practices.
- Extended Payment Plan (New). A member will comply with a separate code of Best Practices for Extended Payment Plans, which provides customers who are unable to repay a loan according to their original contract, the option of repaying the loan over a longer period of time at no additional charge. A customer shall be allowed to utilize an Extended Payment Plan at least once in a 12-month period. A member will adequately disclose the availability of the Extended Payment Plan to its customers. (Effective 7/31/ 2007) CFSA members click here for guidelines »
- Internet Lending. A member that offers payday advances through the Internet shall be licensed in each state where its payday advance customers reside and shall comply with the disclosure, rollover, rate, and other requirements imposed by each such state, unless such state does not require the lender to be licensed or to comply with such provisions, or the state licensing requirements and other applicable laws are preempted by federal law.
- Display of the CFSA Membership Seal (New). A member company shall prominently display the CFSA Membership Seal in all stores to alert customers to the store’s affiliation with the association and adherence to the association’s Best Practices. (Effective 5/31/2007) CFSA members click here for guidelines »
