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Examination Findings

In the course of examining the books and records of licensees DFI examiners are finding that many payday lending companies are making the same mistakes. Here are a few points on which you can focus. Doing so should help you have a cleaner examination next time.

Common violations:

• Failure to post required disclosures in branch lobbies. These disclosures include the consumer’s right to rescind a loan and the right to a payment plan. Licensees should post this information in a prominent place on their web page and in the lobby of their payday lending stores. This is required by WAC 208-630-580.
  
  
• Failure to identify military borrowers on the small loan application. This is required by WAC 208-630-470.
  
  
• Failure to update applications on every new small loan transaction. This requirement is outlined in the rule WAC 208-630-480.
  
  
• Failure to disclose truth in lending requirements on payment plans. Payment plans need to include an APR disclosure. This is a federal requirement under Truth in Lending Act – 15usc, section 1601. Also WAC 208-630-540 points to the federal Truth in Lending Act, requiring that licensees with payment plans comply with the federal law in implementing those plans.
  
  
• Inadequate notification of action taken. Licensees are not providing notification nor are they delivering within 30 days notification of the reason they denied a loan. This is required by federal law. The Equal Credit Opportunity Act (ECOA) Regulation B calls for notification of the reason whenever a loan is denied.
  
  
• Inadequate loan contract disclosure language. Licensees are not disclosing a borrower’s right to rescind the loan nor are they including the borrower’s right to a payment plan in the loan contract. This information should be posted in the lobby of the office, on licensee’s web site and must be included in the loan contract.

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