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 out 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.”

A direct solicitation from The Consumer Financial Protection Bureau says they want to hear from you for the official record! Meaning, payday advance customers! Here’s what Zixta Martinez said in her March 23 blogpost:

Public input is tremendously important to our work at the CFPB. At our January field hearing in Birmingham, we had the opportunity to gather information directly from Alabamans about their experiences with payday loans.

We’d also like to hear from you. The CFPB is inviting public comments for the record. Please take this opportunity to share your thoughts and insights.

Your official comments will help inform how the CFPB works to protect consumers and create a fairer short-term credit marketplace. And to make it easier, you can do it online! Click here to tell the CFPB why a payday advance is an important financial option for you.

You can also watch CFPB Director Cordray’s opening remarks from Birmingham below, or read the transcript of the entire event, including what the Bureau heard from the public.

CFPB Director Richard Cordray speaks on payday loans at yesterday’s field hearing in Birmingham, Alabama.

CFSA released the following statement today regarding the Bureau’s field hearing yesterday in Birmingham, Alabama. The following comments can be attributed to D. Lynn DeVault, CFSA’s Board Chair:

“We appreciate the Consumer Financial Protection Bureau’s (CFPB) willingness to hear from all stakeholders as it develops plans to regulate the small loan market. Storefront lenders made 110 million loans to nearly 20 million American families last year. At a time when access to small dollar loans is more vital than ever, developing strong, uniform, research-based rules will be a benefit to consumers.

“State governments currently regulate all aspects of payday advance lending in every state where payday advance loans are available. We have long worked with our state regulators in all 32 states where we operate to ensure compliance with state licensing and renewal requirements, supervision and examination procedures, and other consumer protection laws and regulations. Our member companies are committed to following all state and federal laws, as well as adhering to our association’s strict set of Best Practices that include truthful advertising, appropriate collection practices, and providing an Extended Payment Plan to customers who are unable to repay their payday advance loan.

“The Bureau’s new Short-Term, Small-Dollar Lending Examination Procedures is now published and our members look forward to working with our new federal regulator to confirm their compliance with all federal consumer financial laws and regulations.”

Quote of the day (from yesterday’s hearing) came from none other than Ted Saunders, member of CFSA’s Board of Directors and also CEO of Community Choice Financial:

“My customer is not uninformed, my customer is not unintelligent and I respectfully disagree that closing me down and letting alternatives flourish would be a good solution”

CFPB Director Richard Cordray’s remarks from yesterday’s field hearing have now been posted onto the #CFPB website. Click here to access the transcript.

A few highlights:

• “… Let me stress again that this is a field hearing. We came here to listen, to learn, and to gather information on the ground that will help inform our approach to these issues. We are thinking hard about these issues, and we do not have all the answers worked out by any means.”
• “Whatever their reasons may be for taking out a payday loan, Americans are now borrowing billions of dollars this way. Lenders collect over $7 billion in fees annually.”
• “… And so I want to be clear about one thing: We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them.”
• “In addition to the things we need to learn more about, we know there are some payday lenders engaged in practices that present immediate risk to consumers and are clearly illegal. While we need to learn more about the prevalence of this conduct and what allows it to fester, where we find these practices we will take immediate steps to eliminate them.”

Kim Gardner, CEO of Cash USA and member of CFSA’s Board of Directors, delivered her remarks at the Consumer Financial Protection Bureau’s (CFPB) first field hearing in Birmingham, AL which convened to discuss the issue of payday loans. The following are her written comments that were submitted for the record:

Hello, my name is Kim Gardner. I represent a small family-owned financial services business. We are also CFSA members and I represent the small member companies on its Board of Directors. I’ve been in the financial services business for 16 years – 10 of which have been right here in Alabama.

I would like to thank Director Cordray and the staff of the Consumer Financial Protection Bureau for inviting me to share some insight into the Alabama payday lending market, and for organizing this series of important discussions.

I am proud to be a payday lender. Not everyone can or will turn to a bank or credit union when they are in need of credit. We provide critical access to short-term credit for millions of American families each year through affordable, reliable and transparent services.

Payday loans are simple, clear and easy to understand. Consumers like the product because it’s quick and confidential. Let’s face it; no one wants to borrow money. But when an urgent need comes up before their next payday, our consumers know they can turn to us.

As a member of the Community Financial Services Association of America (CFSA), an organization seeking to ensure consumer confidence in the payday advance industry, my company abides by a strong code of best practices. These best practices offer consumer protections in addition to those required by state and federal law. Measures include a commitment to full disclosure, truth in advertising and fair collection practices and extended repayment plans – which allow consumers more time to repay their loans and no additional cost.

Our services are effectively regulated at the state level. Under the Alabama Deferred Presentment Services Act, payday loans cannot exceed $500, and through a state-managed database, lenders verify a borrower’s outstanding loans do not exceed the $500 limit. Fees are capped, with a term of 10 to 31 days. Loans can only be renewed once. These measures help to ensure that our customers can be successful borrowers – and that’s our primary goal.

Here in Alabama, approximately 1,100 licensed lenders serve thousands of consumers. Loan examiners from the State Banking Department regularly perform examinations for compliance, and the state collects and manages consumer complaints.

In addition to these comprehensive regulations, lenders also comply with a number of federal regulations including the Truth in Lending Act (TILA) and the Military Financial Services Protection Act, among others.

As a lender and small business owner, I am committed to operating a viable business. But my employees and I are also dedicated to our customers and communities too. Our success belongs to the consumers we serve, and without offering strong consumer protections, we would not be sustainable.

As storefront lenders, we are part of the neighborhoods we serve and sensitive to the needs and concerns of our customers.

As I have found in our stores – communication is key. You have to get to know the customers in order to know how to serve them.

We contribute to the Alabama economy by providing reliable access to credit, but also by hiring local employees and vendors, renting storefronts and using other local services.

But the core of our business is customer service. We treat our customers with respect and dignity and we always keep their best interests in mind.

We know consumers have options when it comes to short-term credit – whether it’s a payday loan, a bank or credit union overdraft program or a credit card advance. Our job is to make sure they have the information they need to make the best personal and financial decision for their individual situations.

As the CFPB and other federal and state regulators work together to look for the best ways to protect consumers, I urge you to create a regulatory framework that allows consumers to compare financial services and products similarly – regardless of the provider.

It’s my experience that customers are best served when they can quickly and easily compare different credit options. You’ve heard different perspectives on payday lending today. Please come see for yourself. I would like to have you visit some of our stores and meet our employees and customers. Listen to their stories and get a better understanding of our service.

I look forward to continuing to working with the Bureau and others to strike the appropriate balance between regulation and reliable access to a wide variety of financial services, including payday loans.

I am confident the Bureau will come to see payday lending as I do – a valuable and legitimate service, offering consumers a needed short-term credit option with meaningful consumer protections and outstanding customer service.