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Monday, October 18, 2010

DFI Warns Washington Borrowers: Beware Of Unlicensed Internet Lenders

DFI is urging 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 do business with is licensed to make loans in the state of Washington.

Consumers should be aware that Internet lenders not licensed in Washington State may also not be 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 collection practices - 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 not licensed," DFI Director of Consumer Services Deborah Bortner said.

“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, especially if they are located outside of the United States.”

Complaints against Internet Lenders a Growing Concern

Complaints regarding unlicensed Internet payday lenders are an increasing concern. Now that Washington law limits consumers to eight payday loans per year, consumers are turning to unlicensed Internet payday lenders.

DFI has received complaints against numerous Internet payday lenders and has published a list of internet lenders not licensed to do business in Washington State.

Tips for Payday Loan Borrowers:
  • Verify the license of a payday lender in Washington State by calling 1-877-RING-DFI (746-4334) or verifying a license online.
  • Read the fine print in any and all documents/terms of agreement you are asked to sign/agree to.
  • NEVER sign or agree to anything you don’t understand.
  • If you have a complaint against a payday lender operating in Washington, file a complaint with DFI.
  • Consider alternative solutions. Ask about delaying or making payment arrangements on your non-interest bills like telephone and utility bills. Talk to a friend or family member about borrowing money. Ask your employer for an advance on your paycheck.
  • Comparison shop for the lowest fees and penalties. For example, some credit unions offer payday loans with lower fees.
  • Borrow only what you can afford to pay back.
  • Know when your payment is due. Most online companies will be deducting your payment directly from your bank account.
  • Take advantage of organizations that are available to help you with your financial situation. Many of these organizations offer help with budgeting, credit repair, debt repayment, and more. Contact your local consumer credit counseling service or asset building coalition.

    Find Your Local Consumer Credit Counseling Service
    Locate Your Local Asset Building Coalition
  • Develop a budget plan for the future by making a realistic budget to help avoid the need to borrow for emergencies and unforeseen expenses.