Fallout from the Consumer Financial Protection Bureau’s proposed rules governing payday loans are starting to be felt with payday lending operations across the U.S.
In Ohio, Community Choice Financial Inc. said it has closed some storefronts and is cutting jobs in response to the regulatory crackdown. The CFPB released proposed rules earlier this year and is expected to have final rules written next year.
Community Choice eliminated 11.2% of its work force in the six-month period ending Sept. 30 to save approximately $11.5 million annually, according to the company’s quarterly financial report. Based on having 3,831 employees at the start of the year, when those figures were last disclosed, as many as 429 jobs possibly have been affected at retail outlets and in back-office functions for the Dublin, Ohio-based company. Community Choice didn't provide figures or respond to a call for comment.
Community Choice is the parent of CheckSmart and nine similar brands. The company has outlined cost-cutting measures as the industry shifts away from the short-term, high-interest loans targeted in the CFPB’s proposed rules.In the six-month period ending Sept. 30, the company had a physical location in 15 states and dropped from 543 storefronts to 535, before putting a freeze on new openings.
The company recorded a net loss of $13.4 million for the nine months ended Sept. 30, compared with a loss of $4.3 million a year earlier.
Community Choice and other payday lenders have continued charging higher rates under a different set of rules meant for mortgage lenders despite Ohio’s efforts in 2008 to curb payday lending by capping interest rates at 28%.