Investigation and Enforcement Actions

What is the Washington State Department of Financial Institutions?

The Washington State Department of Financial Institutions (DFI) is the State administrative agency that regulates nearly twenty industries that deal with financial interests and in financial instruments. DFI has about 200 employees that include financial examiners, consultants, financial legal examiners, information examiners, and attorneys who operate its day-to-day activities. DFI’s regular staff is bolstered by the attorneys and resources of the  Washington State Office of Attorney General to assist in litigation of enforcement actions. DFI makes referrals to other state of federal agencies as needed. As lawyers who have represented individuals investigated by this agency, we warn individuals and companies not to underestimate DFI’s power, resources, and commitment to enforcing state licensing, statutory, and regulatory requirements. 

Who does Washington State Department of Financial Institution | DFI Regulate?

DFI regulates state-chartered depository institutions such as banks, credit unions, savings-and-loan associations, savings banks and foreign banks; it regulates the securities industry and professionals including securities broker-dealers, investment advisers and their agents, securities issuers, franchises, and franchise brokers; it also regulates non-depositary institutions and persons such as mortgage bankers, mortgage servicers, mortgage brokers, consumer loan companies, loan officers, check cashers and sellers (including payday lenders), money transmitters, currency exchangers, and escrow officers. Each Washington financial professional that DFI regulates is subject to specific statutes and regulations. Statutes the DFI Division of Consumer Services administers include:

Chapter 31.04 RCW Consumer Loan Act

Chapter 31.45 RCW Check Cashers and Sellers Act

Chapter 19.146 RCW Mortgage Broker Practices Act

Chapter 19.230 RCW Uniform Money Services Act

Chapter 18.44 RCW Escrow Agent Registration Act  

Chapter 43.320 RCW Mortgage Lending and Fraud Prosecution Account

Chapter 19.265 RCW Refund Anticipation Loans

Chapter 19.144 RCW Mortgage Lending and Homeownership

What if I receive notice of an investigation or complaint from DFI?

Aside from chartering, licensing, and registering individuals and institutions who operate in financial industries, DFI’s core functions include responding to complaints and investigating suspected violations of statutes and administrative regulations, and then taking corrective action and enforcing penalties where it finds such violations occurred. In 2019 DFI investigated 1,730 complaints, issued 207 enforcement actions, and collected $1.6 million in fines and restitutions. Individuals or companies that receive notice from DFI should consult and retain Attorneys early in the investigation process. A prompt response helps attorneys maximize their potential effectiveness and assume the correct posture early in the action. The consequences of a DFI enforcement action can be severe. DFI has the power to suspend licenses, make formal findings that impact one’s ability to be licensed in the future, and to impose significant fines and penalties that can be turned into legal judgments. Formal results of past enforcement actions are available at the  DFI Enforcement Actions page.

The violation of many of the statutes or regulations DFI administers may constitute a violation of the Washington Consumer Protection Act RCW 19.86. Such a violation can expose an individual or company to liability for three times the alleged damage and require the violator to pay the complainants attorney’s fees.

When receiving notice of a complaint from DFI or notice that DFI has instituted an investigation, it is vital that the licensee retain a lawyer who is familiar with the statutes and regulations that govern the industry. In some cases, a legally informed, prompt, and thorough response can prevent a complaint from a customer from becoming an enforcement action or minimize the effect of such an action. Once DFI has instituted an investigation or enforcement action, well informed and strategic representation is crucial.

Ari Brown has actively litigated cases under a number of these statutes for more than twenty years. Cases he has litigated have become precedential cornerstones for application of the Mortgage Broker Practices Act; the Consumer Loan Act; Escrow Agent Registration Act and Washington Consumer Protection Act. Years of litigating cases on both individual and class actions basis pertaining to banking and lending practices have informed Mr. Brown’s approach to dealing with alleged violations of applicable statutes and has heightened his ability to mitigate common mistakes and help financial licensees avoid actions that DFI may perceive as misconduct.  

Robert Rhodes works with Mr. Brown on an as-needed basis. He has handled hundreds of administrative and licensing investigations and enforcement actions in various forums. He often draws on his extensive background in criminal and whistleblower law that occasionally becomes useful.  Other team members are available as necessary.