Complaints Mount Against Two Pay-Day Loan Companies

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By By Connie Thompson

Summary

Now, the state is investigating Fast Cash Loans and Loan Ex for what could be illegal practices in trying to collect their loans.

Story Published: Sep 28, 2004 at 3:33 PM PDT

Story Updated: Aug 31, 2006 at 1:34 AM PDT

Complaints Mount Against Two Pay-Day Loan Companies
SEATTLE - You see them almost everywhere you go: strip mall companies that offer what are know as "pay day" loans.

You give them a post-dated check, they give you a quick loan until your payday. But at what cost to your legal rights?

Prompted by a rash of consumer horror stories, the State Department of Financial Institutions is going after a local lender over complaints so outrageous even investigators are alarmed.

The businesses go by the names "Fast Cash Loans" and "Loan Ex". They're owned by Pacific Financial Holdings based in Federal Way.

The charges are excessive fees, hard-arm tactics and even threats to children.

State investigators say the volume of complaints against Fast Cash Loans and sister company Loan Ex, suggest a pattern of outright breaking the law.

"This case really did have some outrageous collection practices and we were very concerned when complaints started coming in," said Scott Kinney of the State Department of Financial Institutions.

Among the complaints: collectors claiming to be fraud investigators, threatening criminal action, threatening parents with loss of child custody, and even telling kids their parents would go to jail.

Kinney says in some cases, people were tracked down by phone while they were shopping, with collectors sharing consumers' financial business with store managers.

"Contacting family and friends, even human resources directors at their job," added Kinney. "Using harassing collection tactics is definitely illegal. You cannot go to a consumer and do what Fast Cash was doing."

Now the state is going after the company's license, a rare response that stands to shut down one of the biggest paycheck lenders in the state.

The company is working with investigators to make sure employees comply with the law. Fast Cash has until the middle of October to request a hearing before an administrative law judge and try to keep its license from being revoked.

Meantime, the state is pushing a new campaign urging consumers to consider their options, before jumping on a quick loan that could leave you in worse financial trouble than when you started.

While pay day loans can help you in a short-term pinch, you should never use them for a long-term solution, because you can get trapped in a vicious cycle of high interest rates and fees.

Many consumers end up borrowing money from different paycheck loan establishments, in order to pay off their old loans.

We left messages, but were unable to get a response today from the company 's attorney, but he told our newspaper partner the Seattle P-I that his client is cooperating with the state and will move quickly to correct any mistakes.

For More Information:

Tips to avoid payday loan abuse -- www.caa.wa.gov
For more information on the state investigation -- www.dfi.wa.gov

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