Article in the Salt Lake Tribune is asking consumers the following question: Want out of a payday loan? According to HB 459, you could get out of your loan if the payday lender you’re doing business with is not properly registered with the state. Here’s an excerpt from the article:

If a payday lender is not properly registered with the state, a bill approved by the House on Friday would void its loans — and ban collecting any principal or interest.

HB459, approved by the House on a 60-11 vote and sent to the Senate, also requires payday lenders to report some additional information to the state every year — but stops requiring some data that raised questions about how many loans they are making.

Rep. Jim Dunnigan, R-Taylorsville, sponsor of HB459, said most payday lenders with stores in Utah are properly registered, but some shadier ones operating online are not. He said the provision to void loans of unregistered lenders puts teeth in requirements to register.

Earlier this week, a study was released by the Coalition of Religious Communities claiming that payday loan collections and claims make up 37 percent of all cases in Utah’s justice courts. The organizations complaint is that these cases are taking up too much of the time and taxpayer money in the local courts. The study focused on Check City, based in Provo, as a main source of the court backup. But, in a Desert News article from yesterday, Provo City Justice Court administrator argued that the cases are far from a financial burden on the taxpayers.

Newton added that the number of prosecutions for unpaid loans is not a burden on taxpayers. “It is a lot of cases, but anyone who files a small claim has to pay a filing fee.”…The filing fees, Newton said, were set by the Legislature to start at $65 across the state. “When you look at $65 per case, that’s a real cash cow,” Hilton said.

Wendy Gibson, community relations director for Check City, echoed Newton’s claims.

“Not only are these court cases not burdensome on city government or taxpayers, but the courts are generating revenue for cities and counties, thus benefiting local tax payers,” Gibson said.

Yesterday, the Better Business Bureau of Utah warned consumers all over the country about the Utah-based company, EZ Loan Protection. The BBB says that the warning was issued because of a high number of complaints about people being charged by the company even though they never used the product.

In our recent post re: Utah, there is a poll that’s asking readers whether or not payday loans should be banned in the state. We want to make sure you got out there to rock your vote for access to short-term credit. This is where it currently stands now, so make sure you get out and vote!

According to a story from this morning’s Provo Daily Herald,  the Coalition of Religious Communities has released a report claiming that a very high percentage of Provo’s district court’s small claims cases were filed by payday lending companies. Referring to the payday court traffic as a “significant drain on the system,” coalition member Linda Hilton singled out payday lending company Check City as the main cause behind the high numbers. Hilton claimed that the Provo based company requires its customers to report to court in Provo, no matter where their loan was purchased. We have yet to hear a statement from Check City, but will be following closely to see how reliable these claims truly are.

A city council in Utah has placed restrictions on payday lenders.

The ordinance caps the number of businesses allowed in the industry, while eventually lowering the number to 13, and prevents them from existing within 1,500 feet of each other.

Hypothetically speaking, what do you think the reaction would be if the same rules were placed on fast food businesses? No golden arches can be located near a Burger King? Food for thought …

A payday loan database bill was killed in Utah:

The House Business and Labor Committee voted 9-4 to kill the bill, after several committee members said government should not need to protect consumers from themselves.

“You’re asking me to safeguard someone from poor choices?” asked Rep Francis Gibson, R-Mapleton.

The Deseret News is less than enthralled with government bureaucracy: 

Financial regulatory reform is another area ripe for a bevy of new controversial rules. The bill itself was 2,300 pages long. It’s doubtful many lawmakers who voted for it had read it or understood its impact. Among other things, it established an entirely new level of bureaucracy, the Consumer Financial Protection Bureau, whose job will be — you guessed it — to write reams of regulations governing how banks interact with consumers. The new agency covers virtually everyone but auto dealers, who somehow managed to warrant an exemption.

In discussing the “high cost” of payday loans AND the similar costs of credit union “alternatives,” no one has yet considered the possibility-at least among the articles I’ve read–that the market is speaking.  The loans are as cheap as they can be.  From the story:

“The reality is that even our employees occasionally seek payday loans, and we want them to have the best alternative in the marketplace,” said Scott Simpson, president of the Utah League of Credit Unions.

But the Coalition of Religious Communities wants credit unions to pull these types of loans.

“Credit unions that are supposed to be looking out for the people are offering payday loan products to their customers that are between 254 and 318 percent interest,” said Linda Hilton, with the Coalition of Religious Communities.

From the story: 

The consumer group Coalition of Religious Communities charged today that eight Utah-based credit unions are offering predatory payday loan-type products to members, and it wants them to stop.

In response, Scott Simpson of the Utah League of Credit Unions said the interest rates offered on the short-term loans are about half the 521 percent average annual rate charged by payday lenders.

“For years, consumer advocates have asked credit unions to come up with an alternative to payday loans, and now we are being attacked for doing just that,” he said.

Well cry me a river.