We hold our members to a high standard of responsible service. As a condition of CFSA membership, companies are required to follow a set of Best Practices.
Tommy Moore, Executive Vice President, CFSA

Global Compliance, an independent auditing firm, has found that more than 99% of Community Financial Services Association of America's member companies are operating in compliance with CFSA's self-imposed payday-loan industry Best Practices. See Payday Loan Industry Best Practices below.

"We hold our members to a high standard of responsible service," said Tommy Moore, CFSA Executive Vice President. "As a condition of CFSA membership, companies are required to follow a set of Best Practices. We take this very seriously and are committed to ensuring CFSA member company stores are in full compliance."

First adopted in 2000, CFSA's Best Practices have evolved with the growing industry. Most recently, CFSA began requiring all member companies to present consumers with fees on poster-size displays in all stores and on company websites. Other enhancements include steps to ensure responsible marketing, as well as offering an extended payment plan to customers who cannot payback their loan when due.

"The independent auditor found that, among other requirements, stores are properly displaying the Customer Notice and are offering the extended payment plan option. In all, 99% of the stores audited were in compliance," said Moore. "Because CFSA membership is contingent on compliance with Best Practices, those stores not in compliance are being brought up to standard immediately," Moore added.

Global Compliance, an independent auditing firm, audited 11 CFSA member companies in 27 states. In total, 871 audits have been completed and 173 remain pending. While not complete, the preliminary findings were encouraging. Ninety-nine percent of the store locations met all of the following criteria:

-  CFSA membership seal is in clear view from outside of the store;
-  Required counter materials such as customer brochures and the CFSA Best Practices are properly displayed;
-  Marketing materials do not exhibit implicit or explicit suggestions of frivolous activities with proceeds from payday loans;
-  Customer notice, "Payday advances should be used for short-term financial needs only, . . .", was properly displayed on marketing materials;
-  Availability of an extended payment plan option is disclosed by poster, counter card, or brochures.
Of the five stores not in compliance, three locations were reported to have exhibited advertising that inferred frivolous uses for payday loans; two did not properly display the CFSA membership seal. The stores did not receive advance notice of the audit.

*Audits were not conducted in Iowa, Kentucky, Michigan, Mississippi, Nebraska, New Hampshire, or North Dakota because state laws restrict the ability to offer the CFSA extended payment plan. In addition, after Pennsylvania was closed to payday advance companies, audits ceased there. Finally, in Texas most companies do not offer payday advances but serve as credit service organizations, so no audits were performed in Texas.

Best Practices for the Payday Advance Industry
As of 3-14-2008

CFSA members must abide by the following Best Practices:

1. Full Disclosure. A member will comply with the disclosure requirements of the state in which the payday advance office is located and with Federal disclosure requirements including the Federal Truth in Lending Act. A contract between a member and the customer must fully outline the terms of the payday advance transaction. Members agree to disclose the cost of the service fee both as a dollar amount and as an annual percentage rate (“APR”). A member, in compliance with CFSA guidelines where they do not conflict with applicable federal, state or local requirements, will further ensure full disclosure by making rates clearly visible to customers before they enter into the transaction process.
2. Compliance. A member will comply with all applicable laws. A member will not charge a fee or rate for a payday advance that is not authorized by state or federal law.
3. Truthful Advertising Revised. A member will not advertise the payday advance service in any false, misleading, or deceptive manner, and will promote only the responsible use of the payday advance service.
4. Encourage Consumer Responsibility Revised. A member will implement procedures to inform consumers of the intended use of the payday advance service. These procedures will include the placement of a “Customer Notice” on all marketing materials, including all television, print, radio and on-line advertising, direct mail and in-store promotional materials.
5. Rollovers. Members shall not allow customers to rollover a loan (the extension of an outstanding advance by payment of only a fee) unless expressly authorized by state law, but in such cases where authorized the member will limit rollovers to four (4) or the state limit, whichever is less.
6. Right to Rescind. A member will give its customers the right to rescind, at no cost, a payday advance transaction on or before the close of the following business day.
7. Appropriate Collection Practices. A member must collect past due accounts in a professional, fair and lawful manner. A member will not use unlawful threats, intimidation, or harassment to collect accounts. CFSA believes that the collection limitations contained in the Fair Debt Collection Practices Act (FDCPA) should guide a member's practice in this area.
8. No Criminal Action. A member will not threaten or pursue criminal action against a customer as a result of the customer's check being returned unpaid or the customer's account not being paid.
9. Enforcement. A member will participate in self-policing of the industry. A member will be expected to report violations of these Best Practices to CFSA, which will investigate the matter and take appropriate action. Each member company agrees to maintain and post its own toll-free consumer hotline number in each of its outlets.
10. Support Balanced Legislation. A member will work with state legislators and regulators to support responsible legislation of the payday advance industry that incorporates these Best Practices.
11. Extended Payment Plan (New). A member will comply with a separate code of Best Practices for Extended Payment Plans, which provides customers who are unable to repay a loan according to their original contract, the option of repaying the loan over a longer period of time at no additional charge. A customer shall be allowed to utilize an Extended Payment Plan at least once in a 12-month period. A member will adequately disclose the availability of the Extended Payment Plan to its customers.
12. Internet Lending. A member that offers payday advances through the Internet shall be licensed in each state where its payday advance customers reside and shall comply with the disclosure, rollover, rate, and other requirements imposed by each such state, unless such state does not require the lender to be licensed or to comply with such provisions, or the state licensing requirements and other applicable laws are preempted by federal law.
13. Display of the CFSA Membership Seal (New). A member company shall prominently display the CFSA Membership Seal in all stores to alert customers to the store’s affiliation with the association and adherence to the association’s Best Practices.