The state Department of Financial Institutions has sent refund checks to 155 Washington residents who were overcharged or wrongfully charged by an Oregon loan company. Mark Thomson, director of the department’s Consumer Services Division, said his staff was able to get nearly $143,000 in refunds for consumers.
"The money comes from the surety bond covering the company’s operations, rather than the company itself," explains Thomson, "because the company --- Southern Pacific Financial of Lake Oswego, Oregon -- declared bankruptcy after our examiners found substantial problems in their consumer accounts."
The refunds, for overcharges and inappropriate fees charged by the company, range in size from $22 to more than $4,300. About a fourth of the people getting refunds live in the Seattle-Everett-Tacoma area. Most of the rest live in other areas of Western Washington, while 24 are residents of Eastern Washington.
An initial examination by Consumer Services Division staff found a number of violations by Southern Pacific Financial of state laws and regulations, including the Consumer Loan Act. The company was also found to be in violation of the federal Truth in Lending, Real Estate Settlement Procedures, and Equal Credit Opportunity acts.
"Most of the violations had to do with disclosure of loan origination fees, the amounts financed, the finance charges, the 'good faith estimate,' and other requirements placed on lenders," said Thomson. "We found that the company was often charging a flat rate for a service that was in excess of the maximum allowed under the Consumer Loan Act," he added, "and charging ‘administration,’ ‘tax service,’ or other fees it was not authorized to charge."
After Southern Pacific Financial filed for bankruptcy, three examiners from the Department’s staff went through the company’s paperwork to determine how many customers were due refunds. Once the refund amounts were calculated, the bonding company was contacted to make payment.
Financial Institutions Director John Bley said, "These refunds are due to the hard work of Supervising Examiner Ed Burgert and his staff, who negotiated the settlement with the bonding company and Washington consumers.
"This case demonstrates the Legislature's wisdom in requiring a surety bond to conduct this type of business," said Bley. "Without the bond, and the Department's claim on behalf of consumers, these refunds would never have been made."