DATE: October 5, 2007                                                            
 

FiSCA Issues Industry Best Practices for Members
Offering Small Dollar Loans

"Code of Conduct in Offering Access to Credit" Will Help Ensure Customer Protection and Differentiate FiSCA Members in the Marketplace

Hackensack, NJ -- Reaffirming the association’s leadership within the industry, the Board of Directors of the Financial Service Centers of America (FiSCA) has approved an enhanced “Code of Conduct in Offering Access to Credit,” which applies to the making and marketing of payday advances. The expanded Code of Conduct includes principles to help strengthen consumer protections while also providing members with industry best practices guidelines. FiSCA was the first organization to formally adopt such protocols for payday advances, in 1998, and all FiSCA members will be required to comply with the new Code as of December 31, 2007.

The enhanced Code is the latest example of FiSCA’s commitment to ensuring that all consumers have access to the widest possible array of basic financial services, including short-term loans. It sets forth clear policies in a number of key areas. Of particular note is the requirement that members offer extended payment plans, without charging additional fees, to those individuals who may need additional time to repay their loans. In addition, the modified Code limits to four the number of times a customer can roll over or extend a loan. With regard to Internet-based lending, the enhanced Code requires that all FiSCA members be licensed in the state where their customers reside. It also stresses that members strive to educate customers, that the product is intended to be used to address short-term, emergency needs and is not meant to be a long-term solution to ongoing financial needs.  The Code also reiterates the requirement for clear and easy-to-read documentation, such as loan agreements, clear posting of all costs associated with the product and use of clear and straightforward advertising and marketing materials.

“The “Code of Conduct in Offering Access to Credit” expands and enhances the fundamental standards that we continuously strive to achieve in meeting the needs and expectations of the millions of consumers who use our products and services,” said Henry F. Shyne, Executive Director of FiSCA. “We know there is a large and growing demand for short-term, small-dollar loans. It is our duty, to our members and to the marketplace, to provide leadership in establishing protocols and guidelines to help ensure our members are providing the very best customer service possible. It also helps give consumers confidence that when they are using a FiSCA-member store to take out a small dollar loan, they are dealing with a reputable, ethical lender.”

Payday advances are short-term, small-dollars loans that consumers can use to address emergency cash shortfalls. They are not intended to be a long-term financial solution. For many individuals, this option offers a cheaper, fiscally-prudent alternative to other forms of emergency credit, such as paying non-sufficient fund (NSF) fees or overdraft charges from banks. These products are part of a comprehensive suite of financial services that multi-line financial service centers offer.

FiSCA, founded in 1987, is the national trade association for more than 6,500 individual financial service centers across the United States. FiSCA members provide a wide variety of financial services and products to their communities, including check cashing, money orders, money transfers, and electronic bill payment services, automatic teller machine access, government benefit and payroll payments, payday advances, electronic tax preparation, prepaid debit cards, deposit acceptance services, public transportation fare and token sales, motor vehicle license plate and title distribution, postage stamp sales and numerous other services. For more information, please visit www.fisca.org.

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