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Also………..” The Fed also discovered that denial rates for companies seeking microloans were higher than for companies applying for larger loans in the past year.”

So what does this all mean?

1. The transactional costs of lending are disproportionately higher when the loan amounts begin to decrease.
2. Banks are taking less risks.  If you think about it, they’re taking more risks because their loan portfolios are not diversified.

Read more at Inc. Magazine.

Credit card late payments are at an all time low.  My theory is that better technology is making it easier to pay.  Remember the days when people used mail in their credit card payments.  The advent of automated notifications has also made it easier to pay.

One are that I would like to see added is text messaging.  The cash advance industry has embraced text messaging because it bypasses the inbox.  Getting emails delivered is not easy.

An Internet lender in the UK, MCO Capital, has been shut down for allowing itself to be duped by fraudsters who impersonated more than 7,000 people..  It turned into a big problem when the company tried to collect on the victims of identify theft.

It’s hard to believe that there was nothing in place to identify this.  In the US, there are products, like Decision Logic that help verify a person’s bank account.  The service provide proof of identity, account verification, current balance and even recent bank transactions.

Pretty good article in Inc magazine titled, “5 Rules: How to Avoid a Spam Filter“.

Here are the 5 tips:

1. Create a unique subject title.  
2. Avoid ‘salesy’ trigger words. 
3. Keep the format simple. 
4. Use graphics sparingly. 
5. Limit the number of URL links. 

The Wall Street Journal writes:

“A bipartisan team of House lawmakers is pushing new legislation that would allow nonbank lenders, including those typically known as payday lenders, to choose to operate under a federal charter and avoid dealing with a patchwork of often conflicting state laws.”

The operative words here are “…avoid dealing with a patchwork of often conflicting state laws.”  Not sure how accurate this scenario is.  States laws seem to supplement federal laws frequently, so they can still make life miserable for payday lenders.

Business Week magazine also writes about the new push for the federal government to regulate payday lenders.  The article titled “Payday Lenders Seek U.S. Oversight vs. States“.   These changes are about helping US lenders compete against Native American tribes and overseas lenders offering loans online.Cash America (CashNetUSA) is on pace to contribute $400k in political contributions.  Pretty much pocket change for them.  Cash America posted a net income of $135 million on $1,54 billion is revenues for 2011.  That’s pretty remarkable.

“Capital One Financial Corp. (COF) will pay a total of $210 million to settle charges of deceptive marketing of credit card “add-on” products such as payment protection and credit monitoring.”

I guess their 3rd party marketing partner was too aggressive with the add ons.  Hard to say if $210 million means anything to Capital One.  It may be the equivalent of a parking ticket.

Looks like the CFPB is playing judge, jury and executioner. You can read the full story at Bloomberg.

You probably do not want to mess with people after their bankruptcy debts have been discharged.  Capital One and their third party collection company are getting sued.

The article is at the Huffington Post.

Pretty comprehensive article in Bloomberg titled:  “Payday Lenders And Indians Evading Laws Draw Scrutiny“.  It’s about the Internet payday lending industry and Native American tribes.

State governments have either banned or have put a regulatory choke hold on cash advances, which has led to the Sovereign Nation model.  So far, the Sovereign model has been successful at the state level.  The star in all of this is Scott Tucker.  Scott is a race car driver / entrepreneur with a checkered past.  He’s making a lot money working with Native American Tribes that use their sovereign immunity to offer payday loans to US citizens.     There is a huge legal battle going on and no one knows when it will end.  What is inflaming these battles is the CFPB, which is led by Richard Cordray and detests the payday loan industry.  This is starting to read like a Michael Crichton novel.

Pennsylvania House Bill 2191 has been introduced to try and get payday lending legal again in the state.   The bill not allow rollovers and the cost is around $14 per $100.   The bring up all the normal stuff: cycle of debt, usury, impossible to regulate, APRs.  What they don’t say is where you can go when you need $300 and no one will give it to you.  They also fail to recognize that people, in Pennsylvania, have access to payday loans through the Internet.  People are getting loans, so why not regulate it?  Or not regulate it at all and let people make their own decisions?

Typically, the Northestern part of the country is very liberal, so I’m not optimistic.  They also have a website here.  I guess we’ll see what happens.

What are the challenges of offering installment loans?