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.”

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.

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.

The bank industry, according to the Baltimore Sun, is using the struggles of another industry for its marketing: The Postal Service. JPMorgan Chase & Co , Bank of America Corp , Citigroup Inc, and Wells Fargo & Co are all using the looming threat of postal service cuts to sell bank services such as electronic payments and remittance pickups that can speed payments likely to be slowed by diminished mail service.

“It is a conversation starter,” said Daniel Peltz, head of Wells Fargo’s Treasury Management division.

Customers may have to wait up to four days longer for invoices to be delivered and payment returned if Saturday postal service is eliminated, according to one bank official.

Under House Bill 289, Delaware borrowers would be limited to five payday loans of $1,000 or less in any 12-month period, including loan rollovers or refinancing. HB 289 would also create a database to track the number of payday loans a person has obtained.

Excerpt from State of Delaware’s website:

This bill limits to five the number of short-term consumer loans (sometimes called payday loans) that any one borrower may obtain in a twelve month period. It changes the definition of short-term consumer loan to include loans up to $1000 rather than $500. The bill also provides for establishment of a database to track the number of short-term consumer loans an individual has obtained in a twelve month period. Finally, the Banking Commissioner is directed to provide a report on the prevalence and nature of these payday loans to the General Assembly.

HB 289 has been assigned to the House Economic Development, Banking, Insurance and Commerce Committee.

Tomorrow, CFPB Director Richard Cordray will be testifying before the House Financial Services Committee where he is expected to deliver the Bureau’s Semi-Annual Report.  Just a teaser from his prepared testimony on the Bureau’s perspective on financial institutions being “straightforward and upfront with their customers”:

“So another key objective is making sure that both banks and their nonbank competitors receive the evenhanded oversight necessary to promote a fair and open marketplace. Our supervisors will be going on-site to examine their books, ask tough questions, and fix the problems we uncover. Under the laws enacted by Congress, and with a director now in place, we have the ability to make sure this is true across all financial products and services.”

In a blogpost dated last Friday, the Consumer Financial Protection Bureau put out an announcement asking any and all interested parties to “share your input on payday lending for the official record”.

HERE’S WHAT ZIXTA MARTINEZ FROM THE BUREAU HAD TO SAY:

“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.

Payday loans are typically marketed as a way to get quick cash when you need it. They generally have three features: the loans are for small dollar amounts; borrowers must repay the loans quickly; and the loans require that a borrower give lenders access to repayment through a claim on the borrower’s deposit account.

We heard and learned a lot at the Birmingham forum, and we know that there are many others around the country who may wish to add to the dialogue. Please tell us your experiences!

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

From the op-ed we just posted:

Under-banked Americans don’t want charity and they certainly don’t want moral superiority; they just want financial products that meet their needs for convenience, speed, and transparency of pricing. And they are smart enough to determine the best financial option for their unique situation.

Let’s focus our efforts on expanding the financial options for under-banked consumers. This will likely involve innovative new products and new applications of technology and will need to be supported by a progressive regulatory environment.

The last thing Americans need in these difficult economic times is to be given “The Boot” as their only financial option.

Great op-ed from Ken Rees, the CEO of Think Finance, the came out today. Instead of giving customers “The Boot” (the one you might wear and use to panhandle to get money from passerbys), Rees says policy elites should change their “callous view of the real-world needs” and recognize that the underbanked need short-term credit as a viable option.

Most opponents of short-term credit products like payday loans believe that eliminating options for consumers is the right thing to do because they legitimately believe consumers can’t be trusted to make their own financial decisions. That is a dangerous and patronizing point of view.

The truth is that all surveys of under-banked consumers who use products like payday loans show that they are educated, hard working Americans who fully understand their options.

The average payday loan customer has at least some college education, is meaningfully employed, and makes between $35,000 and $50,000 a year. They understand the bottom-line costs (both economic and psychic) of their options and can be counted on to make the best possible decision for them from the options that are available.