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Field Examination

Field Examination of a Payday Lender

Durkin Group was engaged by a Senior Lender to perform a recurring field examination on a finance company that provides payday loans. The field examiners reviewed the credit policies and procedures of the finance company and noted that there was an internal policy against loan flipping. It was also not permitted in the Senior Lender’s loan agreement as repeat borrowers who must increase their loan balance to pay off an older one often find themselves in dire circumstances that lead to bankruptcy. During testing, the field examiner noted that there was an excessive amount of loan flipping in violation of the finance company’s policies at several of the branch locations. The Senior Lender was notified and the finance company was instructed to cease flipping loans.

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