[font=Arial][/font]Okay I am confused! What is the diffence between CSOs and PDLs? According to CFSA, payday loans are not allowed in Texas but they are advertised as such in phonebooks and at the storefronts. What difference does this mean legally and how does that change what recourse I might have if unable to pay?
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meloney, I'm confused. What do you mean pay day loans are not allowed in Texas? Texas does allow pay day loans. According to the CFSA? Where are you getting this information?
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I found this out on the CFSA website. I was looking out how to find out fees for Texas. I placed my cursor over Texas and it shows "Payday advances not allowed in Texas, other short term loan options available"
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Huh? Go to your other thread by clicking on the following link. There is information there for you.
http://www.debtconsolidationcare.com/paydayloan/about42932.html
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Beginning in July of 2005, the major Texas payday loan operators began registering as "Credit Services Organizations" commonly referred to as a "CSO". This includes Advance America, Cash America, First Cash, EZ Pawn, and EZ Cash in addition to many, many small payday loan operators.
Prior to the switch over to the CSO model, virtually all these cash advance operators utilized the bank-charter model; partnering with banks incorporated in states lacking usury laws (referred to as the "payday loan bank model". By partnering with these banks and acting as brokers, the payday loan operators were able to export the usury rate applicable to their partner bank into Texas; or whatever state the payday loan operator/broker located.
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:
Improving a consumer's credit history or rating
Obtaining an extension of consumer credit for the consumer
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".
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...and you are correct meloney, Texas is "grayed" out on the map on the CFSA website.
Thanks volleyballmom! That was very helpful. I had read on many threads referring to CSOs but never a explaination as to what that meant. So if they are unregulated, how does this affect what rights or recourse a person might have if unable to pay or in default? On my previous thread I was advised to make arrangements with them and they have to extend to 4 equal payments corresponding with my paydays. Well with $3900 total in loans I cant afford that. I do wish I had come many months earlier and known that when I would have been financially able to do pay a $1000 a payday and be out in 4 payment intead of just rolling over by paying the "interest" of $800 a payday. So do I have any rights or recourse in an unregulated CSO industry?
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