Washington State Department of Financial Institutions

News Release

Monday, September 11, 2006


DFI Bans Payday Lender from the Industry and Orders Restitution to Consumers

Owners of Expressit, Inc. waive hearing and request to settle with DFI

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:

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.

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.

What is a payday loan?
A payday loan is a small, unsecured, high interest, short-term cash loan. In most cases, consumers write a post-dated, personal check for the advance amount, plus a fee. The lender holds the check for the loan period and then deposits it, or the customer returns with cash to reclaim the check.

What to expect in Washington State?
Payday Lending Limits:

Maximum Loan Term: 45 days
Maximum Loan Amount: $700
Maximum Fee: 15% on the first $500
10% above $500


A loan for $500 + $75 fee = $575
A loan for $700 + $95 fee = $795

Under the Truth in Lending Act, the cost of credit must be disclosed. Among other information, you must receive information outlining the finance charge and the annual percentage rate (APR). The APR informs you of the cost of your loan. For example, a 14-day, $500 payday loan with the maximum fee permitted by statute would have an APR of 391.07%.

Washington Payday Lending Industry Locations: (companies + branches)
1997 - 109
1998 - 221
1999 - 310
2000 - 377
2001 - 382
2002 - 427
2003 - 502
2004 - 590
2005 - 716

Small loans made:
1997 - 562,031
1998 - 978,299
1999 - 1,732,316
2000 - 1,832,782
2001 - 2,186,333
2002 - 2,337,359
2003 - 2,983,477
2004 - 3,297,097
2005 - 3,414,811

Amount of small loans made:
1997 - $144,923,986
1998 - $281,163,536
1999 - $493,584,410
2000 - $580,535,734
2001 - $739,540,654
2002 - $873,339,989
2003 - $1,069,097,758
2004 - $1,238,488,278
2005 - $1,318,262,706

Washington State Department of Financial Institutions
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 has won 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. This week, DFI launched a six-week educational print and radio campaign targeting to the African American community.

Scott Kinney, Director of Communications
PH 360.902.0517 skinney@dfi.wa.gov