By Stafford Newsome
Capital West News
SALT LAKE CITY – After a two years’ wait, a returning state representative seeks to settle unfinished business with Utah’s payday lenders.
Rep. Brad Daw, R-Orem, pushed for payday lending reform two years ago and soon after lost reelection. Regardless of the rocky history behind this bill, Daw wants to find ways to curtail what he calls abuse of Utah residents.
Although not yet filed for public review, Daw said the bill would require lenders to consult a database and confirm that a potential client does not have unpaid loans before issuing new ones, Daw said. He had argued earlier that some Utahns have been trapped in a cycle of taking out loans to pay for previous payday debts.
Daw wants to keep borrowers from piling up overburdening debt. He also wants leaders to make loan practices fairer.
“In short, restricting the level of debt borrowers can get into will curb the more abusive practices of lenders.” Daw said.
The Utah Department of Financial Institutions reported that payday lenders are charging an average of 466 percent interest on loans. The department also found that the state does limit on how much a lenders may charge. As a result, the department’s only advice to residents is, “Borrow only as much money as you can afford to pay with your next paycheck.”
Daw argues that the rates are so high and uncontrolled because Utah is one of the few states in the country that has no payday lending regulations.
“This was done in Florida over 13 years ago and has been very successful,” he said. “Over a dozen states have emulated the model since then.”
Although Daw is adamant about his bill, a similar measure met stiff opposition two years from payday lenders. In fact, Daw claimed multiple times that the lenders went as far as creating advertisements and organizing a negative mail effort that helped him lose his House seat.
Capital West News made several attempts to get comments from leading payday lenders including visits to payday loan storefronts and calls to executives. Managers refused to comment or return messages.