Washington State Department of Financial Institutions

News Release

Tuesday, May 20, 2014


Lyn Peters, DFI Director of Communications
PH 360-349-8501 (cell), lyn.peters@dfi.wa.gov

Deb Bortner, Director Division of Consumer Services
PH 360-902-0511, deb.bortner@dfi.wa.gov


Washington DFI Charges Unlicensed Lenders Using Military and Other Retirement Pensions for Repayment

DFI seeks orders to cease and desist, prohibit from operating in Washington State, collectively pay $259,000 in fines, and refund fees and interest to Washington consumers

OLYMPIA – The Washington State Department of Financial Institutions (DFI) Consumer Services Division announced today they have filed Statements of Charges against Pensions, Annuities and Settlements, LLC (PDF), and Pension Funding, LLC (PDF); two unlicensed lenders making consumer loans to Washington consumers in the form of cash advances secured by future income from pensions.

These unlicensed lenders have made at least 95 loans to Washington consumers, charging fees that would equate to interest rates ranging from 22.7 percent to 129.9 percent. The maximum rate of interest allowed under RCW 19.52, the state of Washington’s usury statute, is 12 percent, and the maximum rate of interest allowed for licensees under the Consumer Loan Act is 25 percent.

The charges allege that pensioners sign a contract to receive a lump sum of cash, totaling sometimes as much as $60,000, in exchange for monthly payments from their pensions to the lender for a fixed number of months, either by direct withdrawal from the pensioner’s bank account or from another bank account set up by the lender for the sole purpose of collecting the required payment.

The DFI has alleged that Pensions, Annuities and Settlements, LLC has made loans to at least 94 Washington consumers involving 23 different pension systems, including the U.S. Department of Defense, U.S. Department of Veterans Affairs, and Washington Department of Retirement Systems. Other pension providers included many local governments. Pension Funding, LLC claimed it did not make "loans," but DFI confirmed one borrower and is confident that more will be identified as the case proceeds. “Our military, civil service, and private retirement system pensioners have spent a lifetime of service to Washingtonians and rely heavily on their pension income,” DFI Director of Consumer Services Deborah Bortner explained. “Loans that are made by unlicensed companies with interest rates exceeding the legal limit are particularly harmful when large loan payments cut into retirees’ limited monthly pension income."

Scott Jarvis, Director of DFI echoed this position.

“These companies are targeting some of our most vulnerable citizens, including elderly and disabled pensioners,” Jarvis added. “It is critical that the financial products and services offered to them be in compliance with the law.”

DFI consulted with the Washington Department of Retirement Systems and military retirement system representatives regarding this matter. Consumers with complaints against lenders may file a complaint with DFI by going to www.dfi.wa.gov and clicking on the “File A Complaint” link. For additional information regarding military pensions, please contact the Consumer Financial Protection Bureau (CFPB) at 855-411-2372 or www.consumerfinance.gov/servicemembers.

Note: The Consumer Loan Act authorizes the Director to file charges against companies and individuals believed to have violated the Act. The charges are not a finding or order that the respondents have actually violated the Act; all named respondents have the right to request an administrative hearing on the charges. To verify whether a company offering loans is licensed by DFI, go to www.dfi.wa.gov and click on the “Verify License” link.

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877-746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

About the Division of Consumer Services
www.dfi.wa.gov/cs ▪ 360-902-8703 ▪ 877-746-4334, x 8703
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as "payday lenders." The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.

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