As a small dollar loan operator, it’s a great idea to look for and carefully review these types of attack documents.
****THIS IS NOT AN INSULT. THIS DOCUMENT IS AN OPPORTUNITY!!!***
They are often used as ammunition by consumer groups, and/or government to shift legislation. You better know what’s being said about you.
They sometimes have information that’s useful to you. For instance: This particular report talks about how the loans are being “sold” to consumers. AS an operator, it’s important to EDUCATE your customer and offer a solution to their problem. It also presents an opening to communicate to you existing customer, your potential customer, and the world how professional you are.
This report focused on four areas that are causing trouble for the industry.
1: Advertising that focuses only on getting the loans, and promoting rollovers.
2: Communication with the customer that doesn’t clearly explain that it’s much cheaper to pay off the entire loan, as opposed to encouraging rollovers.
3: Hard Collections: Many in the industry are using predatory collections. This is the #1 source of consumer complaints.
4: Identity theft. This is a growing problem as the fraudsters are become more sophisticated.
I would even PUBLISH this report on my website, with my comments and responses written in RED ink. All to demonstrate how OUR company does things differently.
Let’s look at one at a time:
1: Your advertising should focus on the SOLUTION you are providing. Don’t get caught in a game of comparing interest rates. What we’re really doing is helping to keep people from overdrafting their bank account. That’s the evidence you post. “Our service will deposit $300 into your bank account. Sure. Our fee may be $90.00. BUT, it’s going to be a lot cheaper than the 8 NSF charges the bank is going grind you with.”
2: Clearly communicate to your customers. Do it in writing. Do it in a video. Do it on your website. Do it in mailings. Do it in emails. Make sure your CSR’s are all trained and complaint. Use simple language. “Here are your three options: First you pay off the entire loan plus the fee. Second, you can pay the fee, and pay DOWN the loan balance. Finally, if you’re a little tight, then you can pay the fee only.”
3: Hard collections: I think there is a time and a place for this approach. But I think it should be used about 1% of the time. Your goal should always be to re-habilitate the customer. Establish a pattern of payments, even if they’re small. Be careful WHO you sell your bad debt to. They will get you dirty. Not worth the trouble to have 500 phone calls of complaints to the local government agency.
4: Identity Theft: Find the best vendors to verify your data. Then let people know HOW you are protecting them. Let everybody know that you are using the latest technology, and security to keep their private information safe.
For a SMART operator? These reports are a GIFT.
Be GREAT out there.
Cheers! Miro Posavec
Copy of the report: http://www.oft.gov.uk/shared_oft/Credit/oft1481.pdf
This is an extensive study done on Payday Loans in the U.K. .