Proposals to limit payday lending in Utah have hit roadblocks in the past, but recent scandals have encouraged swifter action. The House Business and Labor Committee voted 12-0 to pass payday lending reform measure HB127 and send it to the full chamber.
Rep. Jim Dunnigan (R-Taylorsville) sponsored HB127. He chairs the House Special Investigative Committee, which found that, in return for large donations from payday lenders, former Attorney General John Swallow funneled money to help the industry defeat former Rep. Brad Daw (R-Orem), who had sponsored bills to tighten regulation. The industry also made large contributions that Swallow used to defeat his primary election opponent, Sean Reyes, who replaced Swallow when he recently resigned.
Payday loans, which are usually made for two weeks, currently can be renewed or "rolled over" for up to 10 weeks, after which no more interest may be paid. Under Dunnigan’s bill, borrowers would then have 60 days to pay off the loan before lenders could take any action against them. Dunnigan says the threat of lenders filing court action or submitting collateral checks, which can cause bounced-check fees for borrowers, often prompts borrowers to take out other payday loans to repay earlier ones. His proposal also would require default lawsuits to be filed where borrowers live or took out the loan so that they can more easily defend themselves. Lenders additionally would be required to perform at least minimal due diligence to see if borrowers can afford loans and rollovers, such as looking at pay stubs or doing a credit check. HB127 also requires payday lenders to report to the state how many loans go the full 10 weeks, how many end up in default, and the size of the loans involved.