Recently, Washington State’s Department of Financial Institutions (DFI) issued interim guidance on its Predatory Loan Prevention Act (PLPA), which became effective on June 6, 2024 and amends the state’s Consumer Loan Act (CLA). As previously covered by InfoBytes, Washington State amended its CLA with the PLPA in SSB 6025, adding, among other things, anti-evasion provisions to determine whether a person is subject to the CLA.

The DFI’s interim guidance provides additional information on the CLA, describes the PLPA’s changes to the CLA, and offers a grace period for licensure and enforcement related to unlicensed activity. It clarifies the entities or activities that are subject to or exempt from licensing requirements, noting that any person engaging in activities covered by the CLA must obtain a license, regardless of the loans’ interest rates. The guidance also emphasizes that agents or service providers for exempt persons may still require licensure if they hold, acquire, or maintain, directly or indirectly, the predominant economic interest in the loan, or if the totality of the circumstances indicate that the agent or service provider is the lender and the transaction is structured to evade the CLA’s requirements.

DFI provided a grace period, until June 1, for persons requiring licensure as a result of the PLPA’s changes to the CLA. To benefit from this grace period, individuals must submit a license application by the deadline and meet other specified requirements. The fiscal note on SSB 6025 stated DFI estimated approximately 50 currently-unlicensed lenders would need to become licensed under the CLA as a result of the PLPA’s changes.

DFI plans to initiate rulemaking on this matter in 2025, as the interim guidance does not amend existing laws or rules.