Olympia - The owners of Expressit, Inc., a payday lender in Lacey, Washington, agreed to a lifetime ban from the industry after violating multiple state lending laws. The settlement, enforced by the Washington State Department of Financial Institutions (DFI), prohibits owners Carl and Elaine Ehresman from applying for a license or serving as an officer or employee of any payday lending establishment in the future. In addition, the couple must make restitution of over $304,000 to consumers, and reimburse the department for the cost of the investigation.
The multiple violations discovered by DFI included:
- providing small loans to borrowers without a license
- failing to provide borrowers with written agreements or disclosures
- granting loans and charging fees in excess of the legal limitations
- refinancing payday loans with proceeds from other loans
The Ehresmans waived their right to a hearing. They have 30 days to make restitution to 352 consumers and must provide DFI with documented proof following its completion.
Background
In February 2005, the Washington State Department of Financial Institutions (DFI) issued a temporary cease and desist order to Expressit, Inc. After examining the company’s records, DFI found that over 350 consumers had obtained loans between July 2003 and February 15, 2005 from the unlicensed lender. More than 200 consumers had outstanding payday loans with principal balances totaling in excess of $109,000.
DFI discovered that Expressit, Inc. had engaged in one of the more damaging illegal lending practices -- allowing borrowers to make payments of interest only while repaying the principal of existing loans with proceeds from additional small loans. This is known as “rolling” or “extending” loans. For example, one borrower paid over $19,500 in interest on a series of small loans ranging from $600 to $1,875 obtained since at least August 1997 through February 15, 2005 and still owed $1,875.