State authorities claim unlicensed lenders made illegal consumer loans to Washington residents in the form of cash advances secured by future income from pensions.
The unlicensed lenders allegedly made at least 95 loans, charging fees that would equate to interest rates ranging from 22.7 percent to 129.9 percent. The maximum rate of interest allowed under state law is 12 percent, and the maximum rate of interest allowed for licensees under the Consumer Loan Act is 25 percent.
The Consumer Services Division of the state Department of Financial Institutions (DFI) announced in May the charges against Pensions, Annuities and Settlements LLC and Pension Funding LLC;
The charges allege that pensioners sign a contract to receive a lump sum of cash, totaling sometimes as much as $60,000, in exchange for monthly payments from their pensions to the lender for a fixed number of months, either by direct withdrawal from the pensioner’s bank account or from another bank account set up by the lender for the sole purpose of collecting the required payment.
“These companies are targeting some of our most vulnerable citizens, including elderly and disabled pensioners,” said DFI director Scott Jarvis. “It is critical that the financial products and services offered to them be in compliance with the law.”
Officials claimed that Pensions, Annuities and Settlements LLC made nearly all of the loans in question. Pension Funding LLC has denied making any of the contested loans, according to DFI.