FiSCA Statement on the Wall Street Journal article: "Probe Turns Up Heat On Banks"
Financial Service Centers of America (FiSCA) issued the following statement regarding the Wall Street Journal article published August 8, 2013, entitled “Probe Turns Up Heat on Banks: Prosecutors Target Firms that Process Payments for Online Payday Lenders, Others”.
“Every member of the Financial Service Center of America (FiSCA) is state-licensed and regulated, and operates legally in each jurisdiction in which it conducts business. In addition, all FiSCA members adhere to strict Codes of Conduct in regard to store-front and online payday lending. The Codes provide an array of robust consumer protections, including full disclosure of costs and fees. FiSCA's Code of Conduct provides that: “Any FiSCA members offering payday advances through the Internet shall be licensed in each state where its payday advance customers reside and shall comply with applicable laws and regulations, including limitations on rates, rollovers, disclosures and other requirements imposed by state law ...”
"As licensed and regulated businesses, FiSCA members offer customers the option to utilize the Automated Clearing House (ACH) system for receipt of loan proceeds and for repayment, as permitted by state law. Many consumers choose to utilize the ACH system for its convenience and for the privacy it provides. All ACH transactions are authorized by the consumer and are provided in strict accordance with all applicable laws and regulations. Further, as with all products offered by FiSCA members, consumers have full disclosure of all fees and cost associated with their transaction at the inception of the transaction. Payday loans are also subject to the federal Truth in Lending Act, which calls for the disclosure of the cost of credit in terms of Annual Percentage Rate (APR), and other federal and state laws that dictate loan disclosures. As such, the payday loans offered by FiSCA members are a safe, viable, and regulated credit option for consumers who choose to use them. FiSCA’s Codes of Conduct also govern many other aspects of FiSCA member's operations, and can be found at www.fisca.org.
"We have a Code of Conduct that requires that a member offering payday advances through the Internet must be licensed in each state where its payday advance customer’s reside," said FiSCA Chairman, Joseph Doyle. "This is a critical distinction between FiSCA members and the unregulated world. We welcome the efforts of the Department of Justice, the FDIC, and others, targeting unlicensed and unregulated payday lenders, as reported in today's Wall Street Journal article.
“FiSCA members operate well within the laws of the 35 states that permit payday loans, and those laws provide both adequate latitude for lenders to operate, and consumer protection for borrowers. State laws permitting payday lending subject lenders to supervision by state regulatory agencies, including regular compliance examinations. Payday lenders also operate under the supervision of the federal Consumer Financial Protection Bureau, which last year began its own examination of payday providers.
“With respect to the recent regulatory focus on the practices of banks that provide services to unregulated on-line lenders and the processors that service those lenders, unchecked and overly broad regulatory and enforcement efforts can lead to unintended consequences, including a restriction in responsible, regulated credit offerings, such as those provided by FiSCA members, which are often the only alternative available to a consumer; and FiSCA members have in the past been subjected to widespread and unjustified terminations of banking services based on vague and unspecified regulator concerns. In both cases, the true victims of such actions are the millions of consumers who rely upon these services and who, in the absence of licensed financial service providers, are forced to resort to unregulated entities.”