CFSA created the following video to help tell our story to policymakers at POLITICO’s Pro Financial Services Luncheon next week, and we thought we’d share it with you. To learn more about the event, or to register, click here.

As part of its ongoing commitment to support local communities, today the Community Financial Services Association of America (CFSA), the national trade association of regulated storefront payday lenders, announced Lending Hands, an initiative in partnership with MoneyGram International (MoneyGram) and the U.S. Hispanic Chamber of Commerce (USHCC) to assist people and businesses in areas affected by Hurricane Sandy.

Through this effort, MoneyGram will make a $1 donation per transaction up to $200,000 to the American Red Cross for each money transfer sent in November to areas impacted by Hurricane Sandy. Participating CFSA members will match MoneyGram’s $1 dollar contribution for each qualifying money transfer made from their locations to the affected areas, which include New Jersey, Southern New York, Connecticut, and Eastern Pennsylvania.

“Millions of Americans face the daunting task of rebuilding their lives, homes and businesses in the wake of Hurricane Sandy,” said Dennis Shaul, CEO of CFSA. “We want to make that easier in the best way we know how – by facilitating their access to funds and ensuring financial support reaches the people who need it most, when they need it most. Our member companies are proud to join forces with MoneyGram in offering donations.”

In addition, MoneyGram is waiving the transaction fee for customers who make donations to the American Red Cross using its ExpressPayment® service.

“During a crisis, every minute and every dollar count. Our goal is to make it easier to send money to the areas impacted most by Hurricane Sandy,” said Pamela Patsley, chairman and CEO, MoneyGram. “We are working closely with the American Red Cross and our U.S. agents to ensure money sent to this area will quickly and reliably get to the people who need it most.”

“The USHCC applauds the alternative financial services industry for its heartfelt generosity and efforts to alleviate the financial difficulties faced by so many in the wake of this disaster,” said Javier Palomarez, president and CEO, USHCC. “While there is certainly a long road to recovery, it is through initiatives like this that families and businesses along the east coast will be able to take important steps toward rebuilding. We sincerely thank CFSA, its members, and MoneyGram for leading these efforts.”

LOOK FOR THIS DECAL IN THE WINDOW OF PARTICIPATING CFSA MEMBERS:

From our very own Amy Cantu, CFSA’s Communications Director, in an interview with the Las Vegas Sun:

“We’re

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seeing that consumers are making a clear choice to use our product because they like the product. They weigh different products and consider the costs and consequences, and in many cases the payday loan can be a less expensive option than unregulated loans or overdraft fees from a bank. They are looking for a product that will cause them the least pain to overcome their short-term financial difficulty.”

PBS Oklahoma affiliate’s ONR examined the price of payday loans in the state with the following broadcast segment that aired earlier this week. In the story, Lis Exon talks to Oklahomans about their use of the product, how often it’s used, and why O

K consumers are choosing to use it over its “traditional” alternative.

Though the cost is more expensive than a credit card, 13 percent of Oklahomans have used a loan store in the last five years. Not only has the product become more mainstream, but Oklahomans don’t always have access to credit cards (due to credit ratings or lack of access), and prefer a payday loan for its convenience, reliability, and upfront disclosures.

When asked why she would choose a payday loan over a credit card, Billie Adams, an OK payday loan customer said: “This I can control if I need it for a week, if I need it for two weeks. I can take control and pay it back.”

And how do complaints stack up against storefront payday lenders in Oklahoma? Well, they’re virtually nonexistent. According to Rick Brinkley of the Tulsa Better Business Bureau, in the last three years, only complaints about some online payday loan companies have skyrocketed. “We’ve seen nearly 3,000 complaints on tribal payday loan companies,” he said. “We have seen one complaint, I believe, on a traditional payday loan company.”

“I would personally prefer to have storefront payday loan companies in the state, with restrictive laws that are pretty limiting to what a consumer can get. Cause if we do away with payday loan companies in this state, we are literally pushing the poor to these websites where they will be—in my opinion—taken advantage of,” Brinkley said.

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PBS Oklahoma affiliate’s ONR examined the price of payday loans in the state with the following broadcast segment that aired earlier this week. In the story, Lis Exon talks to Oklahomans about their use of the product, how often it’s used, and why OK consumers are choosing to use it over its “traditional” alternative.

Though the cost is more expensive than a credit card, 13 percent of Oklahomans have used a loan store in the last five years. Not only has the product become more mainstream, but Oklahomans don’t always have access to credit cards (due to credit ratings or lack of access), and prefer a payday loan for its convenience, reliability, and upfront disclosures.
When asked why she would choose a payday loan over a credit card, Billie Adams, an OK payday loan customer said: “This I can control if I need it for a week, if I need it for two weeks. I can take control and pay it back.”
And how do complaints stack up against storefront payday lenders in Oklahoma? Well, they’re virtually nonexistent. According to Rick Brinkley of the Tulsa Better Business Bureau, in the last three years, only complaints about some online payday loan companies have skyrocketed. “We’ve seen nearly 3,000 complaints on tribal payday loan companies,” he said. “We have seen one complaint, I believe, on a traditional payday loan company.”
“I would personally prefer to have storefront payday loan companies in the state, with restrictive laws that are pretty limiting to what a consumer can get. Cause if we do away with payday loan companies in this state, we are literally pushing the poor to these websites where they will be—in my opinion—taken advantage of,” Brinkley said.
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Yesterday, as we blogged, the F

DIC released a study showing that 821,000 households opted out of the banking system from 2009 to 2011 and that the unbanked population grew to 8.2 percent of U.S. households.

As a Washington Post article points out today, roughly 17 million adults are without a checking or savings account. Another 51 million adults have a bank account, but use pawnshops, payday lenders, or rent-to-own services, the FDIC said.

This goes to show that consumers are making the choice to use alternative financial services. As a reminder, there are certain requirements that a customer must have in order to obtain a payday advance:

• An active checking account,
• Proof of regular income,
• Proper identification,
• Upon completion of a simple application and approval, a borrower must read and sign an agreement containing disclosures required by the Truth in Lending Act (TILA), and
• Write a personal check for the amount of the advance plus the fixed fee.

When customers start to migrate and make the choice to use our services—which have collectively been called “alternative” but are now evident to be mainstream—this should be a tell-tale sign that consumers have the competency to pick what financial option works best for their given situation. More options for the consumer will force banks to lower prices and become more competitive in the marketplace. When this happens, consumers benefit.

Even payday industry critics understand the consumer’s rationale for choosing to use non-bank services:

“Banks need to have pricing and practices that consumers can trust and allow them to build wealth and have economic mobility,” said Deborah Goldstein, chief operating officer at the Center for Responsible Lending. “If the account fees will leave them worse off, then its going to be a challenge for people to use banking services.”

Pew released a study this week that shows that prepaid cards are a better option for consumers versus checking accounts.

The report divide

s consumers into three types in terms of their banking expertise: “savvy,” who use direct deposit and avoid fees whenever possible; “basic,” who aren’t as proficient at avoiding fees and have at least one overdraft fee a month; and “inexperienced,” who make heavy use of services but typically pay two overdraft fees a month.

Then, the researchers applied those characteristics to more than 200 checking accounts offered by the 12 largest banks, and 52 prepaid cards available online, to see which accounts best-suited each category.

Interesting take away from the study:

Most consumers use prepaid cards as a way to keep spending within their means; overdraft options run counter to this goal and should not be offered.

Check out the fees below.

Along with the report, “Loaded with Uncertainty,” Pew introduced an online tool to help consumers determine which option is best for them. Which one is right for you? Fill out the quick Pew survey below and find out.

A recent opinion piece in The Huffington Post (“New Name for Payday Won’t Fix It,” 08/29/

12) is riddled with inaccuracies about the payday loan industry and the millions of Americans who turn to our product to manage financial obligations that come due before their next paycheck.

To be clear, CFSA does not advocate for H.R. 6139. And to be even clearer, H.R. 6139 does not include the payday loan product or any credit product with a term of 30 days or less.

CFSA member companies have long operated in a highly regulated environment – at both the state and federal level – and we believe such regulation is effective, balancing credit availability and consumer protection.

Lawmakers have acknowledged that consumers understand a payday advance is for short-term use. Just as a taxi is great for a short trip across town, it wouldn’t be economical on a journey from Los Angeles to Boston.

In fact, a payday advance can be the best option for short-term credit. It’s safe, reliable, and often less expensive than other alternatives, which include unregulated loans, overdraft usage, bounced checks, late payments to credit card companies, and utility reconnection fees.

Payday lenders provide a valuable service to American consumers, who can then keep their families and the economy moving forward. That’s a service we’re proud to offer.

And just to give our audience more color on the importance of competition in the marketplace, and how it drives innovation and reduces costs for the millions of consumers, here’s another quote from Martin that CFSA supports:

“A strongly regulated short-term credit market is desperately needed by millions of Americans trying to manage tight budgets in a tough economy. The Birmingham News should take time to better understand this important issue before taking a position, and should be encouraging competition, new services and entrepreneurship in this market, not the elimination of a single service.”

Back in July, CFSA’s D. Lynn DeVault sent a letter to the editor to American Banker discussing the same issue. Here’s a look at what our Board Chair had to say:

“The storefront payday lenders represented by the Community Financial Services Association welcome banks and credit unions into the payday lending market. Increased competition will drive innovation and reduce costs for the millions of consumers who need help managing unexpected and periodic financial difficulties. Our members offer a regulated mainstream financial service that competes favorably with deposit advance and overdraft protection products. What is important is that the CFPB ensures all short-term credit options are simple, fully disclosed, transparent and cost competitive.”

Barbara Martin, Divisional Director of Operations for Advance America, had a great response to an article that came o

ut last week in the Birmingham News online.

“Your uninformed conclusion to eliminate this service from the marketplace would only force consumers who rely on payday advances to use other, less-regulated, more-costly, short-term credit products such as illegal offshore Internet loans and overdraft protection, or pay late fees on credit cards and utility bills.

In Georgia and North Carolina, where payday lending was effectively banned, a Federal Reserve Bank of New York staff report found bounced checks, personal bankruptcies and complaints about other types of lenders jumped significantly when consumers no longer had the regulated payday-loan option.”

Today CFSA applauded the Federal Trade Commission’s (FTC) success in stopping an illegal debt collection operation which tricked people into paying off phantom payday loans. The scam bilked consumers out of more than $5 million over two years.

“CFSA members and federal and state officials all agree on the urgent need to protect consumers from scammers,” said D. Lynn DeVault, Board Chair of CFSA. “We applaud the recent federal enforcement actions against these unscrupulous lenders and debt collectors, who up to now have operated illegally and largely beyond the reach of regulators.”

All members of the CFSA operate by a code of Best Practices, including the collection of past due accounts in a professional and lawful manner. CFSA members adhere to the Fair Debt Collection Practices Act and do not use threats, intimidation, or harassment to collect accounts. Consumers seeking short-term credit and the assurance of fair collections should look for lenders displaying the CFSA Member Seal in their store or on their website.