OLYMPIA – The Washington State Department of Financial Institutions (DFI) urges consumers seeking short-term and/or small loans from companies seen on TV or online to be vigilant, read the small print and make sure any company they work with is licensed to do business in the state of Washington.
Consumers should be aware that lenders associated with these types of organizations may or may not be licensed in Washington State or adhering to our state’s laws. Because of this, the protections in our state’s laws - including limitations on fees that may be charged and laws relating to unlicensed lenders not being able to use our courts - may not be available to consumers using these services should they have trouble with the lender down the line.
“Most Internet-based payday loan lenders are, in fact, not licensed to do business in Washington,” DFI Director of Consumer Services Deborah Bortner explains. “When a consumer takes a loan from an unlicensed lender, there is very little we can do to protect them, and often little we can do to the company if they don’t adhere to our laws.”
Many companies, such as MoneyMutual.com which uses celebrity Montel Williams to advertise their organization, do not offer loans themselves. Per the MoneyMutual.com Website: “THE OPERATOR OF THIS WEBSITE IS NOT A LENDER, does not broker loans to lenders and does not make short term cash loans or credit decisions.” Additionally, some sites, like this one, require you to provide your personal information prior to providing information about which lenders they work with. To receive a loan, you must provide access to your bank account. Payments are then deducted from the account loans were deposited in.
“Consumers should know one of the biggest complaints we receive about online lenders is the over-deduction of funds from the consumers’ bank accounts,” Bortner added.
DFI urges consumers to verify a lender’s license prior to signing anything, make sure you read the fine print on loan documentation and understand the details of what you’re signing before committing to borrow money from any lender.
Information regarding Washington State payday lending laws are available at www.dfi.wa.gov.
DFI urges consumers to:
- Verify the license of a payday lender in Washington State by calling 1-877-RING-DFI (746-4334) or verifying a license online at www.dfi.wa.gov
- Read the fine print in any and all documents/terms of agreement you are asked to sign/agree to
- NEVER sign or agree to anything you don’t understand
- If you have a complaint against a payday lender operating in Washington, file a complaint with DFI online at www.dfi.wa.gov
- Consider alternative solutions: Ask about delaying or making payment arrangements on your non-interest bills like telephone and utility bills. Talk to a friend or family member about borrowing money. Ask your employer for an advance on your paycheck
- Comparison shop for the lowest fees and penalties. For example, some credit unions offer payday loans with lower fees
- Borrow only what you can afford to pay back
- Know when your payment is due – most online companies will be deducting your payment directly from your bank account
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Take advantage of organizations that are available to help you with your financial situation. Many of these organizations offer help with budgeting, credit repair, debt repayment, and more. Contact your local consumer credit counseling service or asset building coalition.
Find Your Local Consumer Credit Counseling Service at www.nfcc.org.
Locate Your Local Asset Building Coalition at www.washington-abc.org.
- Develop a budget plan for the future by making a realistic budget to help avoid the need to borrow for emergencies and unforeseen expenses.