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.