OLYMPIA – Unscrupulous lenders who are partnering with out-of-state banks to evade Washington’s limits on interest rates will have to cease their predatory practices or face sanctions, under legislation signed into law today.
SB 6025, sponsored by Sen. Derek Stanford (D-Bothell), makes any attempt to evade the provisions of Washington’s Consumer Loan Act a violation of the act.
“Our state’s Consumer Loan Act does a good job of protecting consumers and laying out clear standards for lenders and borrowers,” said Stanford. “But some companies are partnering with out-of-state banks and using structures that allow them to slip through a loophole and charge higher interest rates. This bill makes sure regulators can stop that and protect consumers in Washington from these predatory lenders.”
Some companies have been partnering with banks in Utah, which has no limits on interest rates, to offer high-interest loans to some of the most vulnerable populations in Washington state. Interest rates on these unregulated products reach well over 100 percent. Under SB 6025, that would no longer be allowed in Washington.
The changes to the Consumer Loan Act under the bill apply prospectively only and not to loans made before the bill’s effective date, unless the loan is renegotiated or modified afterward.
The legislation goes into effect June 6.
