Wednesday, August 16, 2006
State Files Largest Case Against Payday Lender
Check 'N Go Faces Fines Totaling Over $333,000 and License Revocation
Olympia, WA – The Department of Financial Institutions (DFI) filed a Statement of Charges against payday lender, Check 'N Go of Washington, Inc. The payday lender allegedly collected multiple checks from borrowers to secure single small loans, charged excessive fees, and collected personal identification numbers without the borrowers' knowledge. DFI intends to revoke Check 'N Go's license, impose fines, order restitution, and charge for the cost of the investigation. This is DFI's largest case against a payday lender licensed to do business in our state.
DFI's examination of Check 'N Go stores in Puyallup, Tacoma, and Lacey uncovered a policy implemented in July 2004 which required the borrower to write multiple checks to secure a single payday loan. For example, when a borrower requested a payday loan for $500, Check 'N Go required two-$250 post-dated checks as security. Some 59 customers were found to have written multiple checks in compliance with Check 'N Go's policy.
If the checks were returned unpaid from the borrower's financial institution, non-sufficient fund (NSF) service fees were collected by the financial institution and Check 'N Go. A review of the files uncovered 35 instances in which borrowers received multiple NSF charges from their financial institutions. Check 'N Go also collected NSF fees from at least 29 borrowers when the multiple checks were returned unpaid. Washington's payday lending laws allow a maximum one-time fee of up to $25 for an unpaid check on a single payday loan.
In addition, it was discovered in some instances that Check ‘n Go obtained and stored personal identification numbers of customers without their consent or knowledge. The payday lender obtained and stored the PIN numbers of at least 19 consumers without their consent. This prohibited practice exposed consumers to the potential theft of funds and possibility of identity theft.
DFI intends to revoke Check 'N Go's license to offer payday loans in Washington State and impose fines of $333,700. Check 'N Go may request a hearing to defend the charges.
Check 'N Go of Washington, Inc. has15 stores licensed to do business throughout Washington.
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Statement of Charges
To view a copy of the Statement of Charges, visit DFI’s website at: http://www.dfi.wa.gov/cs/adminactions_2006.htm
How payday loans work
Payday loan companies offer, small, short-term, high interest, loans generally secured by a posted-dated check. The consumer’s post-dated check is written for the advance amount, plus a fee. The check is held for the loan period by the lender and either deposited or the customer returns with cash to reclaim the check. In Washington, the maximum payday loan amount permitted by law is $700, and the maximum term is 45 days.
www.dfi.wa.gov • (360) 902-8700 • (877) 746-4334
Scott Jarvis was appointed the director of the Washington State Department of Financial Institutions in March 2005. The department regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers. DFI has received numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud.
DFI's website features a section devoted to consumer information - including education about payday loans. Visitors can view a list of payday lenders licensed to do business in the State of Washington and listen to recordings of DFI's Spanish and English payday lending public service announcements.
Scott Kinney, Director of Communications
PH 360.902.0517 email@example.com