Utah Representative Will Try Again to Reform Payday Lending
A Utah representative is working on a new bill to protect consumers from payday lenders. This comes as a report reveals the state’s payday lending rate now averages more than 400 percent annual interest.
Republican Representative Brad Daw of Utah County has tried to reform the payday lending industry before. In fact, he lost his re-election campaign back in 2012 after payday lenders spent 100 thousand dollars to unseat him. An investigation revealed that the negative campaign was connected to a consultant of former Attorney General John Swallow. Now Daw has been elected to office again, and he has some unfinished business with the industry.
“The fact that we have as many payday loans going out as we do, and people being abused by the system, that is definitely a problem,” Daw says.
Utah’s payday lending rate now averages 466 percent annual interest. That’s down slightly from the previous year, but the state still has some of the highest rates in the country, and is one of the few that imposes no limit on those rates. Daw says he plans to run legislation in the upcoming session to protect consumers, but he says he has to be diplomatic if he wants it to pass.
“Instead of going for the all-out ban, or the interest rate cap which a lot of people want, I’m saying OK, let’s try to find a way that you guys can conduct business, but let’s also find a way that strips out the abuse,” Daw says. “So that’s why we have this, what I call a compromise piece of legislation.”
Daw’s proposal would bar individuals who get too far into debt from taking out a new loan until it’s paid off. The legislature passed some reforms earlier this year requiring lenders to disclose the terms of their loans, to give a person who defaults ten days’ notice before bringing any civil action, and to give consumers 60 days to pay off a loan with no interest.