CompuCredit Takes the Hint on Payday
CompuCredit‘s house is on fire, and it is throwing its payday lending business out the door.
CompuCredit is an Atlanta collections and consumer finance company that markets subprime products. Its product lines have included credit cards, and payday loans (pejoratively called micro-loans), along with collections on those kinds of products.
CompuCredit claims to target the 43 million (about 27 percent) Americans with a credit score below 650, as well as the 50 million Americans with no credit score at all.
They keep that sub-prime work in house, for the most part. They provide Emblem, Embrace, and Majestic credit cards. Not only do they provide subprime credit, but they also operate a “debt recovery” (collections!) through their subsidiary, Jefferson Capital.
CompuCredit has decided to sell its payday business. It announced in a recent filing that it will spin off its payday subsidiary, Purpose Financial Holdings. Purpose, upon the sale, will become an independent publicly trading company.
Purpose operates from storefronts throughout the Southeast and through the Internet. It had a bit more than $90 million in revenue in 2009. Its loans are for amounts less than $500.
Activism appears to have prompted these changes. An article in Collections and Credit Risk quotes a KBW analyst who says that “separating the payday business would be a prudent decision,” because so many investors want to stay away from payday lending.
It is also a product of regulatory intervention. In 2008, CompuCredit agreed to a $114 million settlement with the Federal Trade Commission and the FDIC, on grounds that it failed to adequately disclose its fee structure. CompuCredit was marketing a credit card with a $300 credit limit. It was aimed at people seeking to restore their credit. CompuCredit did not disclose that fees on the card would by $185, so that the $300 card would only come with $115 in credit.
Aaliyah Wood
May 11, 2010
My credit score last year got lower because i have some unpaid bills on my credit card company and i also lost my job.~”
Logan Baker
May 11, 2010
My credit score last year got lower because i have some unpaid bills on my credit card company and i also lost my job.-:*
terry cully
December 29, 2011
hi,just want to know if compucredit internation finance any payday loan in the uk.thanks
sdoggie
January 4, 2012
CompuCredit sold its holdings in Month End Money, a British provider of internet-based micro loans, to Dollar Financial for $195 million on December 10, 2010.
In January 2010, CCRT filed plans to spin off Purpose Financial. Purpose Financial is a UK micro loan company.
This would mean that CCRT is on a path to move away from doing work in the UK.
One interesting thing about CompuCredit is that one particular fund for large investors has been buying up a lot of their shares. In fall 2010, Second Curve Capital had 11.5 percent of outstanding shares.