CSO and PDL
Date: Mon, 10/06/2008 - 10:51
Ok, so I have seen both of these referenced here, I want to know what is the difference in the two?
Do all states have them?
Do all states have them?
All states don't have them yet, but it wouldn't surprise me if i
All states don't have them yet, but it wouldn't surprise me if it happens.
Quote:
The following state are known to have payday loan companies acting as CSO's (Credit Service Organizations). This means they do not need to be licensed, and are generally 100% legal in what they charge. Florida Maryland Texas |
Goudah posted this awhile back: Quote:What is a CSO Credit Se
Goudah posted this awhile back:
Quote:
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. |