PCG Discussion “Online Lenders” & the newly created “Consumer Finance Protection Bureau”

PCG Discussion “Online Lenders” & the newly created “Consumer Finance Protection Bureau”

Posted on 14. Mar, 2014 by in Blog

Ladies and Gentlemen in Pawnland!

There are several interesting subjects I would like to discuss on today’s important updates and also to thank all of our subscribers for their diligence and continued support of PCG’ programs and efforts to inform – improve and enlighten our industry.

As an active vendor member of the California Pawnbrokers Association or CAPA – I have the liberty to participate on their member’s forum for ALL of their members to the association and enjoy their broad spectrum of views on this industry and much more.

I have to say it is enjoyable to remain on these forums and to participate and only wish the other associations could or would include more of ALL of their supporters to be involved in their communication forums for the betterment of all of us as a pawn community.

Online Lenders

Recent discussion on the CAPA forum has been centered on the “Online Pawn Space” and what the ramifications are or could be as they gain momentum. We recently posted a piece on PCG’s fan page on Facebook about Borro – an online lender which is seeking another round of tranche financing up to 100 million dollars.

The primary question is should we as an industry be worried about this newer lending form in our business?

The short answer I believe has two answers – YES for those that are in the high-end luxury end of the lending sector for sure and – NO for those of us that are still primarily in the less than $1000 mark for an average per loan transaction.

Our friends in California are reporting an increase in competition from some of the online spaces for high value collateral loans. Some opinions denote that some folks just simply will not do business with a pawnshop no matter where or how it looks. This small but elite group of people is doing business with some of these online groups for convenience of never leaving their homes and most likely is a mainstay for many of them. It would remain my opinion that this is a very small segment of the total lending space but is a factor none the less.

As I reported today to one of the Editors of one of the major Pawn Publications is that PCG is witnessing an increase in several arenas.

One of the trends we are seeing are more high-end boutique or appointment only locations which are popping up catering to the upscale markets around the USA. Other trends were seeing are more business owners meeting short term capital needs with quick, convenient quick cash loans and were also witnessing an uptick in large loan demand in general across the spectrum not only in the USA but in the global market place as well.

In the USA further bank restrictions, more consolidations, more regulation and more hoops to jump thru than ever before lay in front of anyone attempting to find conventional financing these days and it is PCG’s belief this trend will continue further eroding options for many in the new millennium as time moves on.

I would like to denote that some of our offshore friends have done multiple million dollar loan transactions.

Many of our clients in the USA are witnessing loans well over the 10K mark and most recently citing one of our groups that just completed a 200K loan in Florida to one high net worth individual.

The other side of the equation says – We seriously doubt folks will be FedEx’ing their TV’s or weed eaters to Pawngo or anyone else in the near to long term future and as such should have no real implication in general business change for the more than 95% ++ of the USA based industry today.

I do believe the online space is just another advent of technology and modernization and it will play out as a factor yes, but for most of us no.

Curious what some of your opinions may be on this subject matter?

Next Topic – Consumer Finance Protection Bureau

PCG would like to poll our subscribers to see if any of you have been targeted by the CFPB in times of recent. This newly created level of Government from our President has been out there and has targeted a number of payday providers, credit unions and other financial institutions. We are curious if any of our pawn fellows have had any issues with this new bureau as of yet?

Recently Cash America fell prey to the CFPB and was fined over $14,000,000 after the CFPB concluded that allegedly they had shredded collection documents and erased phone recorded messages of collection efforts in their payday division.

It would appear that this agency may be seeking more than enforcement but interpretation which is always dangerous when left up to the Government as an opinion.

The staff Editor I spoke to indicated that some credit unions were recently targeted by this agency and that they are indicating that it appears that the CFPB is operating with the opinion that ALL financial institutions are suspect and should be examined accordingly.

This would set a reasonable fear for us as an industry as an opinion and if so we would enjoy hearing from you – for our subscribers if you have any feedback you would like to share with our community in this regard please do so.

Much more to follow and once again, thank you all for you continued support of PCG efforts in the global pawn community!

Respectfully – Jerry Whitehead

Pawnshop Consulting Group, Inc.

954-540-3697

pawnshopconsultinggroup@gmail.com

www.pawnshopconsultinggroup.com

www.pawnsymposium.com

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Jerry Whitehead – Consultant

Pawnshop Consulting Group, Inc.
8501 NW 77th Street
Tamarac, Florida 33321 USA
954-540-3697

Main E-mail:

Pawnshopconsultinggroup@gmail.com

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5 Responses to “PCG Discussion “Online Lenders” & the newly created “Consumer Finance Protection Bureau””

  1. Jeff Beaucicaut

    23. Mar, 2014

    Borro is very impressive in the way it has taken full advantage of leveraging the internet. I feel that there is a lot to be learned from the likes of internet Pawn Shops. On a local level I believe that Pawn Shops can incorporate the same tactics to reach more locals. It’s a matter of study and experimentation.

    Should traditional Pawn Shops worry? No, I agree with your Mr. Whitehead, but lower end Pawn Shops should at least try to leverage the internets powerful infrastructure. No industry, including the Pawn Industry as a whole, is safe from disruption. I’m rallying for lower end Pawn Shops to take a proactive approach in harnessing the internet.

  2. Jer - Trihouse

    24. Mar, 2014

    Jerry, thanks for doing this!

    A strategy of building your brand around innocuous names such as “Executive Lending” rather than “Executive Pawn Shop” is becoming the norm. This is old news to payday loan lenders. Anecdotal evidence from store traffic has made it clear that consumers don’t want to be seen near a PDL store much less inside one. And they certainly are not going to “Like, Friend, or Tweet” our stores as well. There is substantial experimentation with offering lower rates to borrowers who login to our web portals with their Facebook or Twitter credentials. It’s still early in the game.

    Regarding the Internet, it must be emphasized that a mobile friendly website is a must. If your business does not “look great” on a phone your business will suffer. Our demographic is whipping out their phone and performing a search. Google penalizes businesses lacking mobile friendly websites. (And do not fail to “claim” your “Places” listing.)

    Our car title loan stores (Calif., AZ…) are experiencing significant revenue increases. Many small business operators are in need of cash. They’re using their company vehicles for collateral. Rates in Calif. are 8%+ per month on the loan principal.

    The CFPB is wrecking havoc on car title and, of course, PDL’s. State AG’s have their foot on our necks as well. I’m focused on car title and PDL’s so I’m unaware of their activity in the pawn industry.

    I do have a client who is a pure play in online pawn/purchase; focused on Apple products. Revenue is doubling annually for the past 3+ years. The state AG reached out regarding licensing – “dialing for dollars.”

    Jer – Trihouse

  3. Jerry Whitehead

    27. Mar, 2014

    Jer .. some great feedback, we should visit ..

    Jerry Whitehead

  4. Jer

    27. Mar, 2014

    Meet? Certainly. Actually, I was hoping to hook-up with you at the last pawn convention in Irvine(?) but I was stuck in an airport. I live/work in Newport Beach, Calif.

  5. Jerry Whitehead

    05. Apr, 2014

    No worries, feel free to give me a shout .. Jerry