Washington State Department of Financial Institutions

News Release

Friday, August 27, 2010

Contact

Lyn Peters, Director of Communications
PH (360) 902-8731 lyn.peters@dfi.wa.gov

Deborah Bortner, Director of Consumer Services
PH (360) 902-0511 dbortner@dfi.wa.gov

FOR IMMEDIATE RELEASE:


Consumers Should Be Wary Of Organizations Using Celebrity Endorsors Advertising Access To Short Term Loans

Money matchmakers may not verify licensing of lenders, Washington State payday lending consumer protection laws may not apply to loans received through Internet applications

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 http://dfi.wa.gov/consumers/education/payday_loans.htm.

DFI urges consumers to:


About Division of Consumer Services
www.dfi.wa.gov/cs ▪ 360.902.8703 ▪ 877.RINGDFI (746.4334) x 28703
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.

About DFI
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 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: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

[Top]

DFI