This excerpt taken from the QCCO 10-K filed Mar 31, 2005.
The payday loan industry is also regulated under federal law. Changes in federal laws and regulations governing lending practices could negatively affect our business.
Although states provide the primary regulatory framework under which we offer payday loans, certain federal laws also affect our business. For example, because payday loans are viewed as extensions of credit, we must comply with the federal Truth-in-Lending Act and Regulation Z adopted under that Act. Additionally, we are subject to the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act, and with respect to our marketing and servicing arrangement with our lending banks, the Fair Debt Collection Practices Act. These regulations also apply to any lending bank with which we do business as a marketing and servicing provider. Any failure to comply with any of these federal laws and regulations could have a material adverse effect on our business, results of operations and financial condition.
Additionally, anti-payday loan legislation has been introduced in the U.S. Congress periodically, with recent legislation specifically targeting the use of marketing and servicing arrangements between banks and payday loan companies and more recently targeting lending to military personnel. Congressional members continue to receive pressure from consumer advocates and other industry opposition groups to adopt this type of legislation. Any federal legislative or regulatory action that restricts or prohibits payday loans or our activities as marketing and servicing provider for a lending bank, could have a material adverse impact on our business, results of operations and financial condition.
We understand that in 2002, the Federal Trade Commission sent an Information and Documentation Request to several national companies that offer payday loans. This industry-wide review may result in recommendations regarding the payday loan industry or specific conclusions about us, either of which may negatively affect our operations.