How does the CSO Credit Services Organization work with payday loans?

Legal vs Illegal

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Posted: Wed Aug 13, 2008 7:51 am Subject:

Yeah, Cash Net USA is the only one acting as a CSO.

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What is a CSO Credit Services Organization

In essence, a CSO or Credit Services Organization is defined by the Texas Credit Services Organization Act (Section 393 of the Texas Finance Code) as an entity or person that provides one of the following services:

1. Improving a consumer's credit history or rating
2. Obtaining an extension of consumer credit for the consumer
3. Providing advice or assistance to a consumer regarding the previous two services

An important aspect of the CSO or Credit Services Organization model is that there IS NO LICENSING required by the state! CSO's are required to "REGISTER" with the Secretary of State, they are NOT licensed, AND THEIR FEES ARE NOT REGULATED.

How does the CSO Credit Services Organization work with payday loans?

The CSO Credit Services Organization operates as a broker, much as they did when partnering with the banks (payday loan bank model). The Texas Credit Services Organization Act (CSOA) allows the payday loan lender to register as a CSO and act as a loan broker. Thus, the CSO, previously a payday loan company, can make loans via consumer lending companies that are UNREGISTERED and UNLICENSED. The CSO Credit Services Organization acts as a broker for the consumer in need of funds by issuing a "letter-of-credit" on behalf of the consumer to a lender. This third-party unregistered lender funds the "loan" brokered by the CSO "broker".

Typically the CSO Credit Services Organization collects 3 fees:

A referral fee for referring the consumer to the unregistered, unregulated lender that actually funds the "loan". This is not stipulated by any law but is currently $20 to $30 per $100
An application fee for filling out the CSO documents; typically $10 per $100

The interest on the "loan"; Texas state law caps this at $10 per $100.

The CSO Credit Services Organization model arises from a U.S. Fifth Circuit Court of Appeals opinion, in Lovick vs. Rite Money, which held that payments to a registered CSO loan broker could not be treated as interest.

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goudah2424
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Posted: Thu Oct 30, 2008 9:08 am Subject: pdl

i've been paying on several pdls n da state of florida and its taking forever to pay them off r they even legal n florida _________________ Register today to cash in debtcc points.

dorothy07
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Posted: Thu Oct 30, 2008 9:30 am Subject:

Hi Dorothy, Florida does have some companies that act ac CSO's which would make them legal. Can you please tell us: the company name internet or store front how much you borrowed how much you have paid to date including fees _________________ HAPPY NEW YEAR!!! To a crisis of the spirit, we need an answer of the spirit. To find that answer, we need only look within ourselves. When we listen to "the better angels of our nature," we find that they celebrate the simple things, the basic things--such as goodness, decency, love, kindness. Greatness comes in simple trappings. -Richard Milhous Nixon,