2020

California Department of
Financial Protection and Innovation

Annual Report of Payday Lending Activity Under

the California Deferred Deposit Transaction Law
Report Required by Financial Code Section 23026
Lourdes M. Castro Ramírez, Secretary
Business, Consumer Services and Housing Agency

Christopher S. Shultz, Acting Commissioner

Department of Financial Protection and Innovation

Edgar L. Gill Jr., Senior Deputy Commissioner

Division of Corporations and Financial Institutions

Mona Elsheikh, Deputy Commissioner

Financial Services

Published July 2021

 TABLE OF CONTENTS

Executive Summary .............................................................................................................................. 3

Part I: Consolidated Annual Report....................................................................................................... 5
Background ........................................................................................................................................... 5
CDDTL Historical Data – Transactions .............................................................................................. 6
CDDTL Historical Data - Returned Checks ....................................................................................... 8
CDDTL Historical Data – Licensing ................................................................................................. 11
Part II: Consolidated Industry Survey .................................................................................................. 12
Background ......................................................................................................................................... 12
Payday Loan Transaction Volumes Per Customer .......................................................................... 13
Customer Age ................................................................................................................................. 14
Customer Income ............................................................................................................................ 16
Internet Transactions ....................................................................................................................... 17
Lead Generators ............................................................................................................................. 18
Disbursements to Customers .......................................................................................................... 20
Payments from Customers .............................................................................................................. 22
Collections ....................................................................................................................................... 25
Fees ................................................................................................................................................ 28
Subsequent Customers ................................................................................................................... 29
Customers Receiving Government Assistance ............................................................................... 32
Dispute Arbitration ........................................................................................................................... 35
Covered Borrowers ......................................................................................................................... 36
 EXECUTIVE SUMMARY

The Department of Financial Protection and Innovation licenses and regulates deferred deposit
originators, better known as payday lenders, pursuant to the California Deferred Deposit Transaction
Law (CDDTL).
In a payday loan transaction, the consumer provides the lender a personal check for $300 or less.
Also called “cash advances” or “deferred deposits,” the lender gives the consumer the money, minus
an agreed upon fee. By law, the fee cannot exceed 15 percent of the amount of the personal check
and the lender then defers depositing the consumer’s check for a specific period, not to exceed 31
days. Starting in 2005, the Department began regulation of payday loans to provide greater regulatory
oversight and guarantee that consumers have the disclosures necessary to make informed decisions.
The COVID-19 pandemic had a significant impact on the state and national economy and likely
played a role in the decline in payday lending activity in California. There is evidence that the
decrease in payday activity correlates with COVID-19 relief efforts. While there are a number of
factors in the decrease, they likely include the distribution of stimulus checks, loan forbearances, and
growth in alternative financing options.
The annual report and survey data in this report is unaudited and covers licensees’ activities in
calendar year 2020. The report also provides historical data back to 2011.

Key Findings

• California’s payday lenders made almost 6.1 million loans in 2020, worth $1.68 billion. These
represent a 40 percent decline from 2019 totals.

• In 2020, more than 1.1 million individual customers took out payday loans, a 30 percent
decline from 2019 total.

• Almost 61.8 percent of licensees reported serving customers who received government
assistance.

• Subsequent loans by the same borrower accounted for 69 percent of the payday loans in
2020 and 78 percent of the aggregate dollar amount.

• Of subsequent payday loans by the same borrower, 55 percent were made the same day
the previous transaction ended.

• Another 21 percent of payday loans were made one to seven days after the previous
loan.

• Respondent licensees collected $250.8 million in fees on payday loans in 2020. Of that total,
66 percent – or $164.7 million – came from customers who made seven or more
transactions during the year.

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• For the year, 49 percent of payday loan customers had average annual incomes of
$30,000 or less, and 30 percent had average annual incomes of $20,000 or less.

• The number of payday loan customers referred by lead generators declined from 315,030 in
2019 to 98,555 in 2020, a 69 percent decrease.

• Almost 16 percent of licensees made payday loans over the internet during 2020. However,
online payday loans accounted about one-third (2,066,113) of all payday loans.

• About 41 percent of customers (460,458) took out payday loans over the internet.

• In 2020, 277,130 consumers took out single payday loans, compared to 212,003 in 2019.
Typically, consumers took 10 or more payday loans more than a single payday loan in the
past.

• The use of cash to disburse funds to customers and receive payments from customers
continued to decline in 2020. Measured in dollar amounts, cash disbursements decreased
from 75.2 percent in 2019 to 64 percent in 2020.

• Other forms of disbursements, including wire transfers, bank cards, and debit cards, climbed
to 13.3 percent from 4.5 percent over the same period. In 2020, 47 percent of customers’
payments were made with cash, down from 55.4 percent in 2019.

• Electronic transfers accounted for 25.2 percent of payments, compared to 23.5 percent in
2019.

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 PART I: CONSOLIDATED ANNUAL REPORT
BACKGROUND

In this report, the Department of Financial Protection and Innovation (DFPI) has compiled data
submitted by licensed deferred deposit originators, better known as payday lenders, under the
California Deferred Deposit Transaction Law (CDDTL). Financial Code section 23026 requires
licensees to file with the DFPI Commissioner annual reports that provide information related to
their lending activities under the program.

This report contains unaudited data provided by licensees for the calendar year ending Dec. 31,
2020. The numbers are statistical in nature.
As of Dec. 31, 2020, the DFPI licensed 150 payday lenders. Of those, 144 filed required annual
reports in time to be included in this report, and four surrendered their licenses after Jan.1, 2021.
Data from two licensees is not included, however the omission does not materially affect the integrity
of the data compiled in this composite report.
Due to rounding, numbers presented throughout this report may not add up precisely to the totals
provided, and percentages may not precisely reflect the absolute figures.
This report and prior years’ reports can be found on the DFPI’s website at
https://dfpi.ca.gov/publications/payday-lenders-publications/.

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CDDTL Historical Data – Transactions

In 2020, the total dollar amount of payday loans decreased by 40 percent from the previous year,
while the number of payday loans declined 40 percent. Table 1 also reflects a 30 percent drop from
2019 in the number of payday loan customers obtained. The average number of payday loans per
customer has declined from 7.3 in 2010 to 5.4 in 2020.

Table 1: Total Dollar Amount and Number of Transactions

Total number of individual

Total dollar amount of Total number of payday
Year customers who obtained
payday loans loans
payday loans**

2020 $1,683,782,792 6,084,959 1,128,342

2019* $2,819,552,891 10,181,247 1,612,593
2018* $2,817,530,720 10,240,894 1,622,969
2017* $2,940,236,402 10,734,226 1,688,719
2016* $3,140,937,922 11,502,397 1,796,515
2015 $4,170,267,951 12,261,885 1,885,934
2014 $3,376,447,239 12,407,422 1,818,524
2013 $3,165,667,707 12,163,832 1,779,471
2012 $3,229,018,352 12,255,026 1,768,501
2011 $3,276,629,497 12,427,810 1,738,219

* Variances from data published in the annual report due to late filings by licensees.
** Repeat customers counted once

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CDDTL Historical Data - Transactions (continued)

The average payday loan dollar amount decreased to $246 in 2020. The average APR for payday
loans decreased to 361 percent in 2020 from 369 percent in 2019.

Table 2: Transaction Analysis

*Average dollar amount of **Average annual percentage Average number of days of

Year
payday loans rate (APR) payday loans

2020 $246 361% 16

2019 $250 369% 17
2018 $250 376% 17
2017 $250 377% 17
2016 $251 372% 17
2015 $237 366% 17
2014 $235 361% 16
2013 $260 408% 17
2012 $260 411% 17
2011 $263 411% 17

* Maximum transaction amount, per statute, is $300.

** APR is calculated using the average method, in which all APRs reported are divided by the number of licensees.

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CDDTL Historical Data - Returned Checks

From 2019 to 2020, the number of returned checks in payday loan transactions decreased by 48.2
percent. The number of returned checks as a share of total payday loans in 2020 decreased to 5.57
percent from 6.43 percent in 2019 and was at its lowest level since 2012.

Table 3: Returned Checks: Total Number and Dollar Amount

Total number of returned Total number as Total dollar amount as

Year Total dollar amount
checks percentage percentage

2020 338,888 5.57% $90,354,373 5.37%

2019* 654,354 6.43% $176,818,609 6.27%
2018* 647,069 6.32% $177,785,694 6.31%
2017* 660,351 6.15% $178,500,307 6.07%
2016* 773,368 6.72% $193,301,210 6.15%
2015 780,856 6.37% $212,767,330 5.10%
2014 725,170 5.84% $196,652,680 5.82%
2013 706,214 5.81% $191,816,906 6.06%
2012 674,648 5.51% $180,460,466 5.59%
2011 931,387 7.49% $246,769,462 7.53%

* Variances from data published in the annual report due to late filings by licensees.

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CDDTL Historical Data - Returned Checks (Continued)

From 2019 to 2020, the total dollar amount of returned checks recovered in payday loan transactions
decreased 24.2 percent, to $72.5 million. The number of recovered returned checks as a share of
total payday loans in 2020 increased to 4.94 percent from 4.18 percent in 2019 and at its highest
level since 2011.

Table 4: Returned Checks Recovered

Total dollar amount of

Total number of returned Total number Total dollar amount as
Year returned checks
checks recovered** as percentage percentage
recovered**

2020 300,321 4.94% $72,540,932 4.31%

2019* 425,567 4.18% $95,672,481 3.39%
2018* 418,155 4.08% $90,553,602 3.21%
2017* 421,561 3.93% $89,419,679 3.04%
2016* 421,371 3.66% $92,191,739 2.94%
2015 417,957 3.41% $96,878,435 2.32%
2014 399,973 3.22% $93,854,369 2.78%
2013 370,812 3.05% $88,276,576 2.79%
2012 389,312 3.18% $92,394,261 2.86%
2011 642,069 5.17% $160,480,858 4.90%

* Variances from data published in the annual report due to late filings by licensees.
** Includes partial recoveries

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CDDTL Historical Data - Returned Checks (Continued)

From 2019 to 2020, the number and dollar amount of returned checks charged off, meaning payday
loans unlikely to be collected, decreased by 40.3 percent. The number of charged off returned checks
as a share of total payday loans in 2020 remained at 2.6 percent, virtually the same as the prior year.

Table 5: Returned Checks Charged Off

Total number of Total dollar amount

Total number Total dollar amount
Year returned checks of returned checks
as percentage as percentage
charged off** charged off**

2020 158,285 2.60% $39,725,782 2.36%

2019* 265,258 2.61% $66,551,379 2.36%
2018* 265,034 2.59% $66,514,684 2.36%
2017* 343,865 3.20% $82,592,712 2.81%
2016* 548,001 4.76% $143,439,201 4.57%
2015 380,925 3.11% $92,891,127 2.23%
2014 376,728 3.04% $99,586,657 2.95%
2013 336,780 2.77% $88,390,920 2.79%
2012 289,982 2.37% $73,647,144 2.28%
2011 285,555 2.30% $72,367,689 2.21%

* Variances from data published in the annual report due to late filings by licensees.
** Includes partial balances

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CDDTL Historical Data – Licensing

The information in Table 6 and Table 7 reflects licensing activity for calendar years 2011 through
2020. The long form application refers to the first application for a CDDTL license. The short form
application refers to a license for an additional business location. Applications are subject to
abandonment if a deficiency is not corrected within 90 days of notification. Applications can be
withdrawn at the request of the applicant.
The information in Table 6 shows there has been a decline in the number of licensed locations. From
2019 to 2020, the number dropped by 430, or 27.72 percent. From 2011 to 2019, the number
dropped by 568, or 26.81 percent.
Table 6: Licensed Locations

Year Number

2020 1,121
2019 1,551
2018 1,645
2017 1,705
2016 1,854
2015 1,969
2014 2,014
2013 2,058
2012 2,100
2011 2,119

Table 7: Applications Filed

Year Long Form Applications Filed Short Form Applications Filed Total Applications Filed
(License for the First (License for an Additional
Location) Business Location)
2020 5 12 17
2019 11 6 17
2018 20 61 81
2017 8 20 28
2016 17 51 68
2015 19 29 48
2014 35 125 160
2013 38 67 105
2012 29 61 90
2011 32 48 80

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 PART II: CONSOLIDATED INDUSTRY SURVEY
BACKGROUND

In January 2021, the DFPI provided the California Deferred Deposit Transaction Law – 2020 Industry
Survey to all licensed payday lenders. The DFPI conducts this survey pursuant to Financial Code
section 23015.
The survey allows the Department to gather up-to-date information on transaction activities to assess
the financial health and compliance practices of California’s licensed payday lenders, as well as
potential consumer risks. The industry survey collected information on licensees’ activities in calendar
year 2020 related to the following:
• Volume of transactions per customer • Subsequent transactions by the same
• Customer ages and income borrower
• Internet transactions • Transactions with customers who
• Lead generators receive government assistance
• Disbursements to customers • Dishonored checks
• Payments from customers • Dispute arbitration
• Collections • Covered borrowers
• Fees

Some data included in this survey may not exactly match data in the annual report due to minor
differences in the data reported by licensees (Part I of this report).

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Payday Loan Transaction Volumes Per Customer
Questions one through ten of the survey asked licensees to report the number of customers who
obtained a specified number of transactions during 2020. Chart 1 provides the aggregated response
data for each question.

Chart 1: Total Number of Customers by Number of Transactions

Source: Survey questions 1-10

Question 1 2 3 4 5 6 7 8 9 10
Number

Question Obtained 10 or
Obtained 1 Obtained 2 Obtained 3 Obtained 4 Obtained 5 Obtained 6 Obtained 7 Obtained 8 Obtained 9
more Payday
Text Payday Loan Payday Loans Payday Loans Payday Loans Payday Loans Payday Loans Payday Loans Payday Loans Payday Loans
Loans

Totals 277,130 163,365 122,798 97,901 72,044 57,875 48,220 40,851 36,155 212,003

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Customer Age
Chart 2: Number of Customers by Customers' Age
Source: Survey questions 12-17

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Customer Age (continued)
Chart 3: Number of Transactions by Customers' Age
Source: Survey questions 19-24

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Customer Income
Chart 4: Average Annual Income
Source: Survey questions 26-35

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Internet Transactions

Chart 5: Percentage of Payday Lenders Conducting Transactions on Internet

Source: Survey question 37

Table 8: Internet Transaction Volumes and Amounts

Source: Survey questions 38 – 40

2020
Number of Customers 460,458
Number of Transactions 2,066,113
Transaction Amounts $564,290,701

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 Lead Generators

The number of payday loan customers referred by lead generators in 2020 decreased by 68.7
percent from 216,475 in 2019 to 98,555 in 2020.

Chart 6: Number of Payday Lenders Using Lead Generators

Source: Survey question 41

Table 9: Lead Generator Fees

Source: Survey questions 43 and 44

2020
Fees Paid to Lead Generators $4,832,997
Number of Customers Who Made Payday Loans
98,555
that Resulted from Leads

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 Lead Generators (continued)

Chart 7: Percentage of Qualified Leads Resulting in Transactions

Source: Survey question 43 & Annual Report question 3

Transactions made from qualified leads

Transactions not made from qualified leads

The number of payday loan customers referred by lead generators decreased to

almost 9 percent in 2020, from 20 percent in 2019.

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Disbursements to Customers

Chart 8: Number of Disbursements to Customers

Source: Survey question 54

Of the disbursements above, Cash represented 64 percent; Electronic ACH, 21.4

percent; Paper Check, 1.3 percent; and Other, 13.3 percent.

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Disbursements to Customers (continued)

Chart 9: Dollar Amount of Disbursements to Customers

Source: Survey question 55

Of the disbursements above, Cash represented 64.4 percent; Electronic ACH, 21.6
percent; Paper Check, 1.3 percent; and Other, 12.7 percent.

The “other” category includes the following payment types as described by licensees: wire
transfer, bank cards, and debit cards.

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Payments from Customers
Chart 10: Number of Payments from Customers
Source: Survey question 58

Cash accounted for 47 percent of customer payments; Electronic ACH, 25.2 percent;
Paper Check, 2.3 percent; Debit Card, 7.7 percent; Credit Card, 0.1 percent; and Other,
17.7 percent.

California Department of Financial Protection and Innovation 22

Payments from Customers (continued)

Chart 11: Amount of Payments from Customers

Source: Survey question 59

Of the payments above, Cash represented 47.5 percent; Electronic ACH, 24.7 percent;
Paper Check, 2.2 percent; Debit Card, 7.9 percent; Credit Card, 0.1 percent; and Other,
17.6 percent.

California Department of Financial Protection and Innovation 23

Payments from Customers (continued)

Chart 12: Percentage of Payday Lenders Offering Written Payment Plan

Source: Survey question 61

Table 10: Payment Plan Volumes for Repayment

Source: Survey questions 61 - 64

2020
Total Dollar Amount of Outstanding Payment Plans $38,416,426
Total Number of Outstanding Payment Plans 180,286

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Collections

During the time period for which data was obtained for this report, the Department did not have
jurisdiction over debt collectors. However, legislation passed in 2020 granted the Department
supervision and enforcement authority over debt collectors starting in 2021.

The California Consumer Financial Protection Law (CCFPL) (Financial Code 90000-90019) was
enacted on Sept. 25, 2020 and it conferred new authority to the Department to supervise and regulate
“consumer financial products and services.” The CCFPL became effective on Jan. 1, 2021. Debt
collectors squarely fall under that definition and are now subject to the Department’s supervisory
jurisdiction. Debt collectors must also comply with the CCFPL’s general prohibition of unlawful, unfair,
deceptive, or abusive acts or practices, which the Department enforces. In addition, the Debt
Collection Licensing Act (Financial Code 100000-1000025) was enacted on Sept. 25, 2020. It
requires debt collectors to be licensed by the Department.

Debt collectors must apply for licenses by Jan. 1, 2022, in order to continue doing business in
California. Several other laws regulate the conduct of debt collection companies in California,
including the federal Fair Debt Collection Practices Act and California's Rosenthal Fair Debt
Collection Practices Act (Civil Code 1788-1788.33). The Department can enforce these laws pursuant
to the CCFPL, which provides that the Department can enforce any California or federal “consumer
financial law.”

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 Chart 13: Percentage of Licensees with In-House Collections
Source: Survey question 66

A total of 236,153 customers were not in a payment plan and paid in full as a result of in-
house collection in 2020. Those customers accounted for 509,850 transactions. (Source:
Survey questions 67 and 68)

The total dollar amount of 2020 transactions that were not in a payment plan and paid in full
as a result of in-house collections was approximately $131.9 million. (Source: Survey
question 69)

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Collections (continued)

Chart 14: Percentage of Licensees That Own Outside Collection Agency

Source: Survey question 70

Chart 15: Percentage of Licensees Associated with Outside Collection Agency

Source: Survey question 71

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Fees

Respondent licensees collected $250.8 million in fees on payday loans they originated in 2020. Of
that total, 65.7 percent – or $164.7 million – came from customers who took out seven or more
payday loans during the year.

Chart 16: Payday Loan Transaction Fees per Financial Code section 23036(a)
Source: Survey questions 75-81

Question 75 76 77 78 79 80 81
Number

Transaction fees Transaction fees Transaction fees Transaction fees Transaction fees Transaction fees Transaction fees
collected from collected from collected from collected from collected from collected from collected from
Question
customers who customers who customers who customers who customers who customers who customers who
Text
made 1 payday made 2 payday made 3 payday made 4 payday made 5 payday made 6 payday made 7 or more
loan loans loans loans loans loans payday loans

Totals $14,733,396 $12,818,151 $14,658,323 $15,680,572 $14,361,850 $13,854,258 $164,709,127

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 Subsequent Customers

Chart 17: Subsequent Transactions by Same Borrower: Number

Source: Annual Report question 1 and Survey question 89

Number of all payday loans

Number of subsequent transactions by same borrower

Of the 6.1 million payday loans reported for 2020, 69.3 percent were subsequent
transactions by the same borrower.

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 Chart 18: Subsequent Transactions by Same Borrower: Dollar Amount
Source: Annual Report question 2 and Survey question 90

Dollar amount of all payday loan transactions

Dollar amount of subsequent transactions by same borrower

Of $1.68 billion in payday loan transactions reported for 2020, 78 percent of the total
dollar amount represented transactions with repeat borrowers.

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Subsequent Customers (continued)
Chart 19: Subsequent Transactions by Same Borrowers: Days Between Transactions by
Volume
Source: Survey questions 85 - 88

Of subsequent payday loan transactions, 55.1 percent were made by the same
borrowers on the same day the previous transaction closed; 21.1 percent were made
one to seven days later; 7 percent were made eight to 14 days later; and 16.8 percent
were made 15 days or more after the previous transaction closed. These percentages
are based on 4.2 million subsequent transactions for which licensees provided the
breakdown in Chart 19.

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Customers Receiving Government Assistance

Loans Made to Customers Receiving Government Assistance

Almost 61.8 percent of licensees reported serving customers who received government assistance.
Those customers accounted for 8.4 percent of all customers for those licensees. Almost 15 percent
licensees reported that more than 25 percent of their customers received government assistance.
Table 11 reflects number of customers received government assistance in 2020.

Table 11: Number of Customers Receiving Government Assistance

Source: Survey question 91 and Annual Report question 3

Number of customers Number of

receiving assistance licensees
94,298 89

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Dishonored Checks (continued)

Chart 20: Payday Loan Transactions: Dishonored Check Volume

Source: Survey question 83 and Annual Report question 1

Number of transactions with returned check fees charged

Number of transactions without returned check fees charged

Of 6.1 million payday loan transactions in 2020, 5.2 percent or 316,430 resulted in
dishonored check fees.

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Dishonored Checks (continued)

Chart 21: Dishonored Check Fees vs. Transaction Fees

Source: Survey questions 82 and 84

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Dispute Arbitration

Chart 22: Percentage of Licensees with Dispute Arbitration Clause in Written Agreement
Source: Survey question 92

Chart 23: Percentage of Licensees with Dispute Arbitration Clause in Written Agreement That
Prohibits Borrowers from Joining Class Action
Source: Survey question 93

California Department of Financial Protection and Innovation 35

Covered Borrowers

Report of Payday Loans to Active Military Servicemembers and Dependents

Almost 0.7 percent of reporting licensees indicated they had customers who were “covered
borrowers,” which include active members of the military and their dependents. The total number
of such customer was one, and the customer made one transaction amounting to $300. (Source:
Survey questions 49-52)

California Department of Financial Protection and Innovation 36

California Department of Financial Protection and Innovation
Toll-Free: 1-866-275-2677
TTY: 1-800-735-2922
Online: www.dfpi.ca.gov