- Community Financial Services Association of America
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The Community Financial Services Association of America(CFSA) is the national organization dedicated to advancing financial empowerment for consumers through small dollar, short-term loans. Now in its 12th year, CFSA was established to promote laws and regulations that protect consumers, while preserving their access to credit options, and to support and encourage responsible payday advance industry practices.[1]
Contents
Controversy
The payday lending industry has been the source of ongoing controversy due to its lobbying tactics and industry practices that New York Times chief financial correspondent Floyd Norris bluntly calls predatory lending.[2]
”Financial quicksand”
A central criticism of the CFSA member companies has been that payday loans are "designed to keep borrowers in debt".[3][4] While payday loans are marketed as “one time” or “emergency loans,” the Center for Responsible Lending has found that “borrowers who receive five or more loans a year account for 90 percent of the lenders’ business,” and “lenders…collect 90 percent of their revenue from borrowers who cannot pay off their loans when due, rather than from one-time users dealing with short-term financial emergencies.” [5] The U.S. PIRG has documented how payday loans create a “debt cycle” through high cost rollovers, additional fees, and debt collection.[6] Payday lending practices have fueled calls for increased governmental regulation, and several states have taken legislative action to cap interest rates or outlaw payday lending altogether.[7][8] The CFSA states that it is open to working with state regulators and disputes the negative impact of its lending practices.[9]
Payday loans and soldiers
Payday loan companies came under attack following a Department of Defense report arguing that the prominence of payday lending among U.S. servicemen and women was compromising U.S. military readiness and troop morale, and that payday lenders were specifically targeting U.S. military personnel. The CFSA disputed the Department of Defense findings, arguing it was based only on the research of payday lending opponents.[10] As a response to these and other charges, the CFSA initiated a US$10 million education and advertising campaign it claimed would help inform borrowers and improve the lending practices of its members.[11] The CFSA hired Eric Dezenhall, a public relations specialist, to improve its image.[12] In 2007, the DoD created new regulations that fixed interest 3 classes of short term loans, including payday loans, to military members at a maximum of 36% APR. TLW[13]
See also
References
- ^ About CFSA
- ^ In Defense of Predatory Lending? - Floyd Norris - Business - New York Times Blog
- ^ Marketplace: Trapped in financial quicksand
- ^ Facing South: Payday lending = financial quicksand
- ^ Financial Quicksand: Payday lending sinks borrowers in debt... - Center for Responsible Lending
- ^ Predatory Lending In Lane County: A Survey Of Payday Lending In Eugene And Springfield - U.S. PIRG
- ^ North Carolina Declares Victory In War On Payday Lending
- ^ Cashback Payday Loans Banned In New York
- ^ CFSA > About the Payday Industry > Myth vs. Reality
- ^ The New York Times > Business > Seeking Quick Loans, Soldiers Race Into High-Interest Traps
- ^ San Diego Source > Commentary > Columnists
- ^ Predatory Lending And The Military:
- ^ http://www.defense.gov/releases/release.aspx?releaseid=11369
External links
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