OLYMPIA - The Washington State Department of Financial Institutions (DFI) Consumer Services Division has issued administrative charges and cease and desist orders in more than a dozen cases against illegal, unlicensed payday lenders in the past two years. Within the past few months, DFI successfully resolved three of these administrative actions against Action PDL, Integrity PDL, and Mycashnow.com. The companies and individuals involved operated under several additional business names. The conclusion of these actions resulted in the companies making restitution to certain Washington borrowers in the form of refunds and in the cancellation of all outstanding loan balances. The companies also paid collective fines and investigation costs totaling $286,000 and agreed to cease and desist from engaging in any consumer lending to residents of Washington without a license.
“This agency will continue to pursue enforcement actions against companies that don’t comply with Washington laws that are in place to protect borrowers from illegal lending, excessive fees, and abusive collection tactics,” said Scott Jarvis, Director of DFI.
While some internet payday lenders are licensed with DFI, the vast majority are not. DFI continues to receive regular complaints from Washington borrowers regarding online payday lending. In 2013 and 2014, DFI received a combined 416 complaints relating to online payday lenders; only two of the entities that were the subject of these complaints were licensed with DFI.
“Legal payday loans are small, short-term loans that have restrictions on fees,” said Consumer Services Division Director Charles Clark. “Illegal payday loans, however, are small, short-terms loans, with interest and fees that are often outrageous.”
Borrowers who obtain loans from illegal lenders also are particularly vulnerable to abusive collection practices. Some of the most common complaints are repeated and harassing calls at work, threatening criminal prosecution, and harassing and lying to co-workers or family members. Borrowers have also reported that some companies have illegally attempted to garnish their wages. Illegal lenders have also been reported to have sold personal information.
For these reasons, DFI strongly urges Washington residents to verify that the payday lender is licensed to offer payday loans and to do some research before providing personal information, such as the following:
- Visit the DFI website, http://www.dfi.wa.gov, and select “Verify License.” Type in the name of the company offering the loan, and it will search the DFI licensee database and return any results.
- Conduct an Internet search. Before giving personal information (social security number, date of birth, bank account number), consumers should conduct an Internet search on the name of the company to see if other consumers have complained about the lender.
- Ask the lender for their Washington State license number. If the lender doesn’t give an answer, or states that they don’t need to be licensed, it is almost certain that the payday lender is not licensed.
If you realize that you’re dealing with an unlicensed lender, please contact the Enforcement Unit of DFI’s Consumer Services Division at http://www.dfi.wa.gov/consumers/payday-loan-complaint to file a complaint. Even if the unlicensed lender appears to be complying with state law, consumers may not have the protection of a surety bond (required of DFI licensees) or receive loans in compliance with other protections provided for under Washington State law, including privacy protections and limitations on fees and interest.
DFI mostly relies on Washington consumers to report potentially illegal lending activity. If you or someone you know obtained a loan from an unlicensed payday lender or if you have any other complaint against a licensed or unlicensed payday lender operating in Washington, file a complaint with DFI at http://www.dfi.wa.gov/consumers/payday-loan-complaint
About DFI, www.dfi.wa.gov, 360-902-8700, 877-RINGDFI (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: 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/industry/consumer-services, 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.