Community Financial Services Association of America Best Practices for the Payday Advance Industry

To be a member in good standing of CFSA, a payday advance provider must abide by the following best practices:

1. Full disclosure. A member will comply with all applicable state or federal disclosure requirements. In the absence of specific state regulation, a member must fully disclose to the customer all details of the payday advance transaction. 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).
2. Compliance. A member will not charge a fee for the payday advance service nor engage in any practice designed to charge a fee that exceeds that authorized by applicable law. A member will not charge additional add-on fees, such as late fee, not authorized by state or federal law.
3. Truthful Advertising. A member will not advertise the payday advance service in any false, misleading, or deceptive manner. CFSA supports as a guideline for truthful advertising the advertising regulations contained in the federal Truth-in-Lending Act.
4. Encourage consumer responsibility. A member will implement policies and procedures to inform consumers of the intended use of the payday advance service. These policies will include notifying consumers that a payday advance is a short-term cash flow tool not designed as a solution for longer term financial problems.
5. Limit/prohibit roll-overs. Although a payday advance is a short-term solution to an immediate need, we recognize that a short-term cash flow problem may take several pay periods in order to correct itself. In states were roll-overs are prohibited by applicable law, a member will not under any circumstance allow a customer to do a roll-over in states were a roll-over is permissible, a member will not allow its customers to roll over a transaction more than three(3) times.
6. Right to rescind. A member must 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 threats, intimidation, or unlawful 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 actions against a customer as a result of the customer's check being returned unpaid or the customer's account not being paid.
9. Self-policing of the industry. A member will participate in self-policing of the industry. A member will be expected to report violations of applicable law to CFSA, which will in turn bring the matter to the attention of the violator. If the violation does not cease, the violator will be reported to the state regulatory authority. Each member company agrees to maintain and post its own toll-free consumer hot line 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.