In the United States, a reputable payday loan lender is usually a member in good standing of the CFSA or the Community Financial Services Association of America. This organization outlined Best Practices that must be observed by payday loan companies. Here are some of them.
An honorable member of the CFSA must disclose information required by both the State (e.g. office location) and the Federal Government (e.g. Federal Truth in Lending Act). The contract between the lender and the borrower must specifically state the terms of the payday loan including the exact amount of the lender’s service fee. At the same time, the lender must not charge any fee that is not approved by either the State or the Federal law.
A respected member of the CFSA must not be involved in any fraudulent or deceitful advertising. Instead, the CFSA payday loan lender must urge consumers to be more responsible about their finances. The lender must make it a point to inform the borrower that a payday loan is a short-term method of bridging a financial gap and that it cannot solve demoralizing financial problems. The lender must also inform the consumer about credit counseling services.
Some States allow limited roll-overs and others prohibit them. In States where roll-overs are prohibited, the lender must not offer such repayment option to their consumers. In States where roll-overs are allowed, the CFSA member-lender can only give up to the maximum limit (usually 4) of roll-overs permitted by State laws.
With CFSA members, a borrower has the right to revoke the payday loan transaction on or before the close of the next business day. When the borrower rescinds the payday loan, he is not supposed to pay additional service fees for the nullification of the transaction.
When the borrower is unable to pay his dues, the CFSA member may conduct collection in a manner which is professional, fair, and lawful. The member should not resort to harassment or intimidation. The member must abide by the conduct described in the FDCPA or Fair Debt Collection Practices Act. A lender may not take any criminal action against a borrower who cannot pay his debt.
All CFSA members must endeavor to keep the industry of payday loans as an honorable and desirable means of meeting emergency cash shortage. Thus, they may also report to the CFSA violations of Best Practices done by other payday loan companies. The CFSA, in turn, will conduct investigations and will enforce their rules. To facilitate this, all CFSA members must have, in each of their offices, their own consumer hotlines that are toll-free.