In an effort to protect consumers statewide, Rep. Troy Kelley (D – Tacoma) introduced a measure to prevent out-of-state Internet payday lenders from doing business illegally in Washington.
“We have made great strides to protect Washington consumers throughout the past several years,” Kelley said. “If out-of-state Internet payday lenders want to do business here, they must abide by our rules.”
Today, unlicensed Internet payday lending is deemed a gross misdemeanor and a violation of the Consumer Protection Act. However, prosecutors rarely take up misdemeanor cases that cross state lines. Kelley’s House Bill 1805 cracks down on those illegal out-of-state lenders by making unlicensed payday lending an unranked class B felony and raising the bar on enforcement. Licensed payday lenders are not impacted by the new measure so it means business as usual for payday lenders who choose to abide by the current law.
“This is a new tool to better enforce our current laws,” Kelley said. “A few of these illegal lenders are out of the country, and I think they are beyond our reach. However, others are just beyond our borders, and we must do what we can to stop them.”
Kelley said he plans to send a “clear message” to illegal lenders, and he believes that collaboration with law enforcement nationwide will strengthen efforts to carry out the law.
Unlicensed Internet payday lenders currently require their borrowers to waive their right to a jury trial, waive their right to a court to decide a dispute, and waive their right to obtain evidence in a lawsuit. Disclosure terms from illegal lenders even state that borrowers must agree that no state or federal law or regulation shall apply to the loan and its enforcement.
Kelley’s House Bill 1805 heads to the Senate for further consideration.
In addition, Kelley sponsored House Bill 1195 to strengthen consumer protection by clarifying that a license and endorsement are needed to make small loans. This legislation also recently passed the House and moves to the Senate.