Last month the consumer finance company Promise started closing some of its retail outlets, specifically those that still feature human beings. Thirty percent of the company's staff will be laid off by the end of the year. Promise is currently the biggest of the consumer lending companies that were making so much money at the beginning of the last decade, with 1,361 unstaffed branches and 148 staffed. It was also the first to announce the closing of branches, though according to an article in the Asahi Shimbun all consumer finance companies are following suit. Acom started whittling away at its 118 branches last September and will have only 45 by March. Aiful will have reduced its original 96 stores to 28 by the end of February. And Takefuji will have reduced its 180 outlets to 100 by the end of the year.
Several years ago the consumer finance industry was hit with multiple lawsuits from customers who said the companies were charging too much interest. Courts agreed and awarded large settlements, and in 2006 the government changed regulations to get rid of the so-called gray area that allowed for such exorbitant interest rates. In June, the Money Lending Business Law will start to be enforced, greatly restricting loan extensions. Almost all of the consumer loan companies declared bankruptcy after 2006 and have had to reorganize in order to stay alive. In most cases they've gotten back on their feet thanks to their partnerships with major banks, many of which predated their bankruptcies.
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