October 23, 2015

ALA Members and Friends:

The Alabama Lenders Association is committed to differentiating ourselves from payday and title pawn lenders, who are not traditional installment lenders. Our website at www.alabamalenders.net clearly sets forth who we are and what we are about:

We are traditional installment lenders. Our lending is based on three principles: (i) equal installment payments (ii) for customers who have the ability to repay (iii) with a clear pathway out of debt. Installment loans show with clarity precisely when the loan will pay out based upon the payment schedule. We help our customers build their credit record by reporting to credit bureaus. This encourages both responsible borrowing and responsible lending. Our loans are customer driven—no prepayment penalties and understandable repayment terms are the rule. Our loans are transparent, making them the safest loan product for consumers. And, we make loans from local offices with local lenders, offering much more personalized service than a bank.

Our members—whether large or small–are committed to traditional installment lending. The Association adopted a policy that our Members may not hold licenses under the acts permitting these other types of lending. The Executive Committee, now joined by the chairman of the Membership Committee, carefully vets all applicants for membership to ensure that their business methods comport to our Association’s Code of Ethics, adopted over 10 years ago. Our Code of Ethics is clearly presented on our website.

We recognize that it is vitally important that the good name of installment lenders, and the Alabama Lenders Association in particular, not be confused with payday and title pawn lending. We work hard to distinguish ourselves, and tell the story of our good work.

Should you have any questions concerning membership or the mission of the Association, please raise them with me, President Kevin Gardner, or any member of the Board of Directors.


October 07, 2015

To ALA Members and Friends:

This morning the CFPB announced its proposal to ban mandatory pre-dispute arbitration clauses in consumer contracts that require a consumer’s claims to be arbitrated separately and severally. Over the years, creditors have developed arbitration clauses that require claims between consumers and creditors to be arbitrated, and that limit such arbitrations to individual actions as opposed to class-wide arbitration. In other words, consumers can’t join with others similarly situated to pursue claims together. Consumer advocates and others have argued that such contractual provisions frustrate consumers, prevent remedial class action, and unfairly protect bad-actors.

Section 1028 of the Dodd-Frank Wall Street Reform and Consumer Protection Act specifically mandates the CFPB to conduct a study—which it has—and if the Bureau finds that prohibiting or limiting arbitration “is in the public interest and for the protection of consumers” then it may adopt a rule consistent with the study’s findings.

The March, 2015, study by the CFPB analyzed

* over 1,800 consumer finance arbitration disputes filed over a period of three years,

* a sample of nearly 3,500 individual consumer finance cases filed in federal court over the same three year period,

* all of the 562 consumer finance class cases filed in federal court and in selected state courts during the same period,

* 40,000 small claims filings over the course of a single year,

* more than 400 consumer financial class settlements in federal courts over a period of five years, and

* more than 1,100 state and federal public enforcement actions relating to consumer finance.

According to the CFPB, the study results prove that consumers are adversely served by limiting their access to class action litigation. The full study is available for review at http://www.consumerfinance.gov/reports/arbitration-study-report-to-congress-2015/.

The Outline of Proposals found at http://www.consumerfinance.gov/f/201510_cfpb_small-business-review-panel-packet-explaining-the-proposal-under-consideration.pdf would not ban mandatory, pre-dispute arbitration clauses entirely. Rather, the CFPB proposes that arbitration clauses in consumer finance contracts would have to explicitly say that they do not apply to cases filed as class actions unless and until the class certification is denied by the court or the class claims are dismissed in court.

The arbitration procedure for individual claims is not left entirely alone in the Proposal. The CFPB is also considering mandating that companies that use arbitration clauses for individual disputes, submit to the CFPB the arbitration claims filed and awards issued. Also, the CFPB is considering as part of the Proposal, the publishing of the claims and awards on its website.

The CFPB’s Outline of the Proposal to address arbitration is the first step in the rulemaking process. The next step is to convene a Small Business Review panel to gather feedback from interested parties. Once that is done, then the CFPB would adopt a Rule to become operative no earlier than 180 days after the effective date of a final rule. The CFPB contemplates setting an effective date of 30 days after the rule is published, thus giving creditors 210 days after a rule is published to make changes to form contracts.

I will discuss this with you in more detail as matters progress.


July 21, 2015

Office of Communications
Tel: (202) 435-7170


WASHINGTON, D.C. – Today, the U.S. Department of Defense issued a final rule expanding the types of credit products that are covered by the 36-percent rate cap and other military-specific protections under the Military Lending Act. The rule closes loopholes that have led to lenders skirting the law with products that fall outside the scope of the existing regulation.

Consumer Financial Protection Bureau Director Richard Cordray issued the following statement:

“I congratulate Secretary Carter and the Department of Defense on the final rule published today. The CFPB strongly supports the Department’s efforts to strengthen consumer protections for our nation’s military families. Today’s rule will help ensure that American servicemembers get the legal protections they deserve. As one of the agencies responsible for enforcing the Military Lending Act, we stand ready to stop illegal lending to military families.”

Holly Petraeus, Consumer Financial Protection Bureau Assistant Director, Office of Servicemember Affairs, issued the following statement:

“When I drive down the strip outside a military installation and count 20 fast-cash lenders in less than 4 miles, that’s not a convenience, that’s a problem. I commend Secretary Carter for taking this important step to make the Military Lending Act more effective.”


The Military Lending Act provides servicemembers and their dependents with specific protections for their “consumer credit” transactions. Among other protections, the law limits the annual rate on an extension of such credit to 36 percent, provides for military-specific disclosures, and prohibits creditors from requiring a servicemember to submit to arbitration in the event of a dispute. As initially implemented by the Department of Defense in 2007, the Military Lending Act protections applied to three narrowly-defined “consumer credit” products:

closed-end payday loans for no more than $2,000 and with a term of 91 days or fewer;
closed-end auto title loans with a term of 181 days or fewer; and
closed-end tax refund anticipation loans.

The final rule announced today amends the definition of “consumer credit” covered by the regulation to more closely align with the broad, traditional definition of credit covered by the Truth in Lending Act. The rule generally covers consumer credit offered or extended to active-duty servicemembers or their dependents, as long as the credit is subject to a finance charge or payable by written agreement in more than four installments. In accordance with the statute, the MLA regulation would continue to exclude residential mortgages and credit extended to finance the purchase of, and secured by, personal property, such as vehicle purchase loans.

The Military Lending Act is implemented by the Department of Defense, and is enforced by the CFPB and other federal regulators. In September 2013, the CFPB released guidelines on how its examiners will identify consumer harm and risks related to MLA violations when supervising payday lenders. In November 2013, the Bureau took action against a payday lender, Cash America, for extending payday loans to servicemembers and their families in violation of the Military Lending Act. In December 2014, the Bureau issued a report highlighting how lenders had continued to exploit loopholes in the existing Military Lending Act rules.

The announcement by the Department of Defense is available here: http://www.defense.gov/Releases/Release.aspx?ReleaseID=17395


The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

June 11, 2015

Two developments to report to you:

Frist, SB 327, the exemptions/garnishment bill that we fought so hard for was just signed by the Governor this afternoon. I want to take this opportunity to thank John and Tami Teague for the great job that they did in seeing this bill through passage in the 11th hour in the Senate, with our amendment on it. This amendment will have far reaching effect if it is successfully used to reverse the decision of the Alabama Court of Civil Appeals in Pruett. I thought the bill was dead (and reported it to some as such) one week ago. But, because of John’s extraordinary efforts, he was able to get it brought up for consideration by the full Senate in the midst of the battle over the Budget. And, now the Governor has signed.

The result is that we have increased personal property and homestead exemptions in Alabama together with a clearly stated “intent of the Legislature” that wages, salaries and bonuses are not personal property for the purposes of Alabama law and the Alabama Constitution. This law is in effect now.

Also, the Small Claims Court jurisdictional amount increase to $6000 was passed and signed by the Governor. This new law is Act No. 2015-224. It becomes effective on August 1, 2015. Some of our members took the lead on getting this bill shepherded through the Legislature. .

When we are in Point Clear, be sure to thank all of the people who work so hard for us in and on Montgomery matters—our friends in the Legislature, our members and our government affairs experts!


April 7, 2015

Social media policies: Why every employer needs one

By Daniel J. Burnick • Friday, March 27, 2015

Over the past several weeks, you may have read about the murder of a young girl in Birmingham at a fight that was arranged through Facebook; or the fight in Birmingham’s Railroad Park that was posted on Facebook; or the fight in Green County at a school bus stop where shots were fired that was posted on Facebook; or Wisconsin Governor and Presidential hopeful Scott Walker’s Director of Social Media who resigned after inappropriate tweets. It seems as if every day or two, there is another instance of social media activity that makes you shake your head and wonder what is going on.

Employers often face the same predicament. Recently in Montgomery, an employee at Max Credit Union was placed on leave after being accused of commenting on a customer’s account on a local Facebook page. According to the report, “a MAX employee posted a couple’s account information claiming they had a negative balance in their account on the Prattville-Millbrook Montgomery Black List Facebook page. Max Credit Union is investigating the claim.”

Any employer faces the risk of having inappropriate information posted on Social Media by an employee that should not be posted. The information can be trade secrets or confidential information, such as customer lists, pricing information or a secret formula. It can be personal identifying information such as social security numbers, addresses or dates of birth. Medical practices have patient information that if posted on social media can be a violation of HIPAA. Social media posting by attorneys or their clients can waive the Attorney-Client privilege or breach settlement agreements that have confidentiality provisions. Unlawful harassment, be it based on race, sex, pregnancy, disability or other protected classifications can occur on social media. Every Employer has information that it does not want posted on Social Media.

Employers should be proactive in addressing the improper dissemination of information through social media by implementing a social media Policy, educating and training the workforce on the policy, and enforcing the Policy. Although the implementation of a social media policy may not prevent improper postings, the policy can be the basis for disciplinary action, up to and including termination. Such a policy may also provide some measure of protection for the Employer should the Employer be sued as the result of an improper posting on social media.

Practice pointer: Employees are constantly acting inappropriately on social media. Oftentimes, the inappropriate conduct centers on work issues. It is important for Employers to implement a social media policy, which is in compliance with the National Labor Relations Act, educate and train their employees on the policy, and enforce it.

For more information, please contact:

Daniel J. Burnick



March 26th, 2015

To: AFSA Membership

From: Chris Stinebert

Re: CFPB Provides Early Look at Payday Loan Proposal

Date: March 26, 2015

Early this morning, the Consumer Financial Protection Bureau (CFPB) published an outline of proposals it is considering regarding payday loans in advance of convening a Small Business Review Panel to gather feedback from small lenders, which is the next required step in the rulemaking process. The CFPB is also hosting a field hearing on the subject today at 12:00 p.m. EDT.

Despite specifically mentioning certain high-cost installment loans, the proposals shared by the CFPB today focus on ability to repay, loans requiring repayment via a deposit account or paycheck, or the lender holding a security interest in the borrower’s vehicle. The proposals would cover short-term credit products that require consumers to pay back the loan in full within 45 days, as well as “high-cost, longer-term credit products of more than 45 days where the lender collects payments through access to the consumer’s deposit account or paycheck, or holds a security interest in the consumer’s vehicle, and the all-in (including add-on charges) annual percentage rate is more than 36 percent.” This all-in rate could be analogous to the Military Annual Percentage Rate or MAPR.

The CFPB announcement specifically references installment loans. “Installment loans typically stretch longer than a two-week or one-month payday loan, have loan amounts ranging from a hundred dollars to several thousand dollars, and may impose very high interest rates. The principal, interest, and other finance charges on these loans are typically repaid in installments. Some have balloon payments. The proposal would also apply to high-cost open-end lines of credit with account access or a security interest in a vehicle.”

The proposals fall into two categories: one covering short-term loans and the other covering longer-term loans. Both categories include two sets of requirements that lenders could choose to follow, either prevention requirements or protection requirements. Under the prevention requirements, lenders would have to verify the consumer’s income, major financial obligations, and borrowing history to determine a consumer’s ability to repay the loan. For longer-term loans, fees for ancillary products must be included in the ability-to-repay calculation. Under the protection requirements, lenders would have to comply with certain restrictions intended to ensure that consumers can affordably repay their debt. Both categories would include restrictions on the number of loans consumers can receive in given time periods.

The proposal also includes restrictions on collection practices. The CFPB is considering requiring lenders to provide borrowers three business days’ notice before submitting a transaction to the consumer’s bank. In addition, a lender could not attempt a third withdrawal from a consumer’s deposit account if the two prior attempts were unsuccessful without obtaining a new authorization. Finally, the proposal caps short-term loan rollovers at two – three total – followed by a mandatory 60 day cooling off period. Refinances on longer term loans would be prohibited if the consumer is delinquent on previous loan obligations.

It appears that the CFPB was intending to cover title loan products in this area of their proposal; however, if a traditional installment lender holds a security interest in the borrower’s vehicle, it would be covered under the proposal. AFSA will seek clarification on this requirement as well as ensuring that the ACH portion of the proposal is only triggered if a lender requires access to a consumer’s deposit account rather than offering the service as a convenience to the consumer.

Although we are encouraged that the CFPB’s outline of various proposals under consideration does not focus on traditional installment loans, we remain diligent and concerned that the actual proposed rule may adversely impact our member’s business practices, and more importantly, consumers’ ability to access credit through the most affordable product available – traditional installment loans.

The proposals published today are the first step of a lengthy process and could change substantially. Next, the CFPB must convene a Small Business Review Panel. After the panel, the CFPB may formally propose rules, which must be subject to the public comment and review process. AFSA will be represented on the upcoming Small Business Review Panel, and will continue to work with the CFPB throughout the process. AFSA will continue to make the distinction between traditional installment loans and other small dollar products to the CFPB, policymakers, and the general public.

The field hearing will be streamed live via the CFPB blog starting at 12:00 p.m. EDT.

Relevant Links:

Outline of Proposals

Fact Sheet on Proposals

Fact Sheet on SBREFA panel process

Fact Sheet on SBREFA panel

Press release

For more information, please contact AFSA Executive Vice President Bill Himpler at 202-466-8616 or bhimpler@afsamail.org.

January 16, 2015

ALA Members and Friends:

We’ve gotten a number of inquiries recently about the dates for our next two meetings:

The Legislative Meeting & Reception in Montgomery is March 17th, on the 6th floor of the RSA Plaza Building, 770 Washington Avenue. The RSA Plaza Building is located directly across Washington Avenue from the Alabama State House which is behind the State Capitol. The meeting will start at 3:00 PM, and the Reception for Members of the Legislature and Staff will start at 5:00 PM. Please plan to stay and talk to our friends in the Legislature, until approximately 8:00 PM. Parking in the adjacent lot, will open at 2:30.

The Annual Convention in Pt. Clear is June 18th through 20th. This Conference will take place at the Marriott Grand Hotel on Mobile Bay, and will include counsel information from Sam and me on the topics of compliance, legislation and more. Association business topics include mapping out the direction for the Association in the coming year. And, of course, we will have all of our fun activities and entertainment including great food, golf, and fishing. Be on the look-out for the 2015 Registration Brochure.

I look forward to seeing you at both meetings.