Cash loan payday quick utah

Payday lenders targeted

About three years ago, Patricia Bailey got sick -- so sick that she had to quit her job. Paychecks became sporadic, inconsistent in frequency and amount.

Desperate and needing quick cash, Bailey went to a payday lender. And then another and another. On one check, Bailey recalled, she took out nine loans.

Today, Bailey is in bankruptcy -- a recovery period of sorts, during which she has decided to take up philosophical arms against the payday lending industry and the people who regulate it.

"I'm not proud of what I did," she said Friday at a news conference outside a Check City store on 3300 South. Now Bailey said she wants to spread the word that there are pitfalls to payday loans and push for better loan alternatives for low-income people.

The news conference was called by the Coalition of Religious Communities to announce the release of its "report" on payday lenders. During the summer of 2004, the coalition trained its members on laws governing the industry and sent them to pose as customers at the various lenders. What they were really doing, however, was looking for violations. According to Linda Hilton, director of the coalition, they found them.

"Of the 57 outlets that were investigated, 41 had at least one violation of Utah state law," Hilton said. "Seven had three or more violations. We find that very appalling.

"Payday lenders prey on low-income people. They give loans of a minimum of 521 percent (interest), which averages out to $10 per hundred per week. People use these as a last resort when they don't have credit cards, when they don't have access to credit for lower- interest bank loans, and in times of emergency and crisis."

Payday lenders generally make small loans for brief periods. The borrower typically is required to prove only employment and possession of a checking account; the lender extends the borrower a loan

on a post-dated check from the account. At the end of the loan period, the borrower can allow the check to be deposited, return with cash (or cash equivalent) to redeem the check, or pay another fee to roll the loan over for another repayment period.

In its report, the coalition said it found 65 violations over three months, including failure to post annual percentage rates and weekly loan rates, failure to post information for customers wishing to file complaints, and failure to grant borrowers a 24-hour right to cancel the loan. Moreover, Hilton said some lenders "had employees who gave varying information on fees depending on their appearance, their perceived national origin and their perceived ethnicity."

Bryan Blanchard, district manager for Check City, said Friday that "we are audited regularly by the Department of Financial Institutions, and we have a clean bill of health."

"Our rates are clearly posted, and we have on average the lowest APR in the state," at $8 per hundred per week, Blanchard said, maintaining that Check City "provides a variety of services to a large and loyal following."

On any given Friday, one Check City store (there are 11 in Utah) will perform upward of 1,000 transactions, including loans, check cashing, money orders, tax preparations and wire transfers, he said.

The coalition sent its report to the industry's regulator, the Utah Department of Financial Institutions, and announced that it will again push for lawmakers to come up with penalties for businesses that don't comply with state law. Hilton said her complaints in the past been "ignored" by the DFI.

Edward Leary, commissioner of the department, said regulators have repeatedly urged the coalition to report violations so that they can be investigated and maintained that regulators have been anything but lax. The department received the report and will review the information with examiners, Leary said.

"We send examiners in once a year to every payday lender," he said. "The fact that we do that puts us in a category that I believe ranks us among the most aggressive regulators in the industry. Linda Hilton has said that her people find violations. Our response is that our financial institutions examiners find few violations.

"We try to ensure that they (lenders) are complying with the law," Leary said. "If Linda or groups are displeased with what the law requires of the lenders, then the Legislature is the proper forum to address that -- which they have done."

As of December 2003, there were 115 "deferred deposit lenders," Leary said, 184 when counting branches. There were 99 check-cashing stores.

Hilton said the coalition is already working with Sen. Ron Allen, D-Stansbury Park, on a bill for the 2005 Legislature.

E-mail: jnii@desnews.com