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|The Texas CSO Model - CAB Credit Access Business for Payday Loans & a 100% Check Guarantee Program
Beginning in July of 2005, the major payday loan operators in Texas began registered as "Credit Services Organizations" commonly referred to as a "CSO". This includes Advance America, Cash America, First Cash, EZ Pawn, and EZ Cash in addition to many, many small payday loan operators.
Prior to the switch over to the CSO model, virtually all these cash advance operators utilized the bank-charter model; partnering with banks incorporated in states lacking usury laws (referred to as the "payday loan bank model". By partnering with these banks and acting as brokers, the payday loan operators were able to export the usury rate applicable to their partner bank into ; or whatever state the payday loan operator/broker located; simalar to the credit card industry.
What is a CSO Credit Services Organization
An important aspect of the CSO or Credit Services Organization model is that there IS NO LICENSING of the "lender"required by the state! The "Lender" does have to register with the state (TX) and disclose their contact information. CSO's are required to "be licensed" with the Texas OCCC, AND THEIR FEES ARE NOT REGULATED.
How does the CSO Credit Services Organization work with payday loans?
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.
The applicability of the CSO Credit Services Organization to use in other states is being explored now. Thirty-one states plus Canada have provisions for the CSO Credit Services Organization entity. Since it is typical of the CSO not to be regulated, and the fact that the CSO fees are not considered interest as per the 5th Circuit Court of Appeals, there is little doubt we will see this approach utilized on a grand scale in the future!
For a thorough discussion of the CSO Credit Services Organization Model including the applicable Statutes and the CSO Registration Form for , we invite you to purchase our CSO Report.
100% Guarantee Check Program for the CSO Model-Payday Loans in
We offer a CSO Analysis & Report at the bottom of this page: CSO Report This report includes an approximately 35 page overview and analysis including sample contracts and forms.
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