The corporate parent of EZMoney has shuttered all of its operations. EZCorp, the operator of 990 pawn and consumer loan stores in fifteen states, said last week that it would wind down its US operations in vehicle title, payday, and consumer installment lending immediately. The company said that the trend to a more strictly regulated environment, coupled with their internal difficulty to achieve scale, meant that it was better to forego its operations in lending entirely.
"It was fairly clear to us that the US Financial Services market was a difficult one for us to achieve market leadership on," said EZCorp CEO Stuart Grimshaw, "so the decision was made that we will no longer be writing payday, auto title, or installment loans in the US and we will be closing US financial services. That means that we will focus on US pawn, Mexico pawn, and Grupo Finmart."
EZCorp had been the sixth largest player in US payday lending. Grimshaw hypothesized that more regulation would have the effect of increasing the competitive advantage afforded by scale and that those benefits would not be available to a firm of their size. But he was down on the prospects for the field as a whole, as he believes that future regulations will only add to regulatory headwinds for every industry participant.
"If you look at the regulations, there is no doubt that if the CFPB initiates the regulations that they have outlined, that it is going to be difficult to the industry as a whole. In fact, some of the experts have suggested that the revenues in the industry will drop by sixty percent. We are seeing in Texas, city ordinances are being introduced quite regularly. We have had five already in 2015 and there is one going in next week. And, a number of states have introduced regulations which will also impinge upon our ability to operate."
They also said that their internal surveys had concluded that consumers in the United States liked going to its pawn shops more than they liked using loans at its EZMoney stores. That is a finding that may support a lot of what advocates have been saying for a long time - that the debt trap is a horror.