Jamie Fulmer, Senior Vice President of Public Affairs for Advance America, released the following statement and remarks from his testimony at the Consumer Financial Protection Bureau’s (CFPB) field hearing on payday loans in Nashville, Tennessee:
“The short-term lending industry constantly evolves to serve changing consumer needs and preferences, which traditional financial institutions have largely ignored. As the marketplace changes to meet consumer demand, the regulatory framework must also evolve. Regulators must avoid imposing ‘test lab’ concepts that constrict the ability to borrow from a regulated lender but fail to consider how consumers behave in the real world and do nothing to alleviate their need for short-term credit.”
– Jamie Fulmer at CFPB Field Hearing on March 25, 2014
Senior Vice President of Public Affairs
Senior Vice President of Public Affairs
As prepared, not necessarily as delivered
Thank you, I appreciate the opportunity to be here today to share my thoughts on the complicated issue of access to cost-competitive, regulated and transparent credit.
Collectively, Lynn and I bring the unique perspective from 30 years serving our customers in our stores across the country. Let me just say, that I have met thousands of our customers, and they are decent, hardworking folks, who make a fully informed decision to choose the products and services we offer relative to the other options.
Regulated payday loans are just one of the options in the broader marketplace that help customers bridge a gap in their finances. Every customer who walks through our door is different and uses short-term credit products differently to meet their individual needs. Some have an emergency need, while many are dealing with the periodic financial challenges of life. Regardless of what brings them through our doors, they are overwhelmingly satisfied with us.
As with any industry, the market for short-term credit continues to evolve. In fact, banks’ efforts to participate in this market are now limited only to expensive overdraft programs, following recent guidelines from the FDIC and the OCC. This is a disappointing development, and one the CFPB and other regulators should take note of. Banks, non-banks, not-for-profits and others should be encouraged to participate in a regulated market that meets the needs of consumers. Case in point, the U.S. Postal Service is examining ways that it may be able to meet unquestioned consumer demand. We welcome them to the marketplace, provided they – and anyone else – are held to the same regulatory standards.
As with the product itself, the Industry’s evolution includes the addition of new products such as installment loans for those who prefer to repay over a longer period of time. But I would caution, installment loans alone are not the answer. Consumers deserve a mix of credit options, including the two-week cash advance. Currently, half of the markets that Advance America operates in already have installment loans, but many borrowers in those markets still choose a traditional payday loan because it best meets their individual needs and preferences.
A Harris Interactive national poll of actual customers who borrowed from a regulated storefront lender found that 98 percent are satisfied or very satisfied with their payday loan experience, and 93 percent carefully weighed the benefits and risks before taking out a loan. Almost all have clear expectations of both of the cost and of the time it takes to repay.
Further, we see very few complaints filed against our company with state or federal regulators. Last year alone, we responded to approximately 200 out of 11 million transactions. And many of those were scams perpetrated by illegal actors in no way affiliated with our company. This is a separate but important issue that deserves special regulatory attention.
As the marketplace changes to meet consumer demand, the regulatory framework must also evolve. Up to this point, the focus has primarily been on restrictions placed on lenders. But we now need to focus on the consumer to gain a better understanding of why Americans borrow – and value – short-term loans. Despite the intense pressure from special interest groups, regulators must avoid imposing rules that fail to consider how consumers behave in the real world. “Test lab” solutions that are designed to constrict the ability to borrow from a regulated lender do nothing to alleviate consumers’ need for short-term credit.
Families faced with a gap in their finances are forced into riskier options such as unregulated loans, which are available in every state, and which thrive particularly where regulated borrowing options are unavailable or severely limited. This should be a real concern of the Bureau and of policymakers in states that do not have a regulated environment. In fact, it should be noted that in his remarks, Director Cordray referenced a customer complaint from a customer in a state without regulated payday lending.
We’re here in Tennessee, which is one of 32 states that have recognized the realities faced by borrowers and carefully crafted laws that provide comprehensive consumer protections while still preserving access to credit. Today’s important discussion creates a pathway where the CFPB and others can work together to explore opportunities for collaboration, with the collective goals of empowering American consumers, helping them make informed financial decisions, preserving their ability to access credit when they need it, and protecting them from unscrupulous, unregulated lenders.
But the hard work goes far beyond the discussion we are having here today. Earlier this year the CEO of Advance America called on the CFPB to establish a working group of banks, credit unions, start-up lenders, and other non-bank financial service providers – to ensure a level regulatory playing field among providers, and to conduct a thoughtful examination of American Consumer Credit. This is more important today than ever before. It is our sincere hope that the Bureau will strongly consider this suggestion and we stand ready to help. Our customers and the American consumer will be better off as a result.