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Already convinced the state Department of Financial Institutions is not doing enough to keep "payday lenders" from pillaging low-income people and others desperately short of cash, religious-based advocates now contend they have the data to support their claims.

The Coalition of Religious Communities, a multifaith group dealing with poverty issues, taught a number of volunteers about the legal details of the Utah Check Cashing Registration Act, then sent them out this summer to do spot inspections of lending practices at 57 Salt Lake-area stores that provide short-term, high-interest loans to people strapped for cash until their next paychecks arrive.
This probe, coalition spokeswoman Linda Hilton said Friday, discovered violations at 41 of the 57 payday loan outlets. She said seven outlets had three violations; 10 others had two apiece. In all, the coalition's volunteer "loan seekers" said they observed 65 violations.

Almost all of the violations, she contended, involved the shops' failure to post weekly and annual interest rate levels or their reluctance to give borrowers the right to rescind the loan agreement within 24 hours of its signing.

"They prey on low-income people . . . and take advantage of their situations and the fact there is no other place for (borrowers) to turn," Hilton said at a news conference outside the Fast Cash Payday Loan store.
 
Hilton's coalition represents 17 religious groups, including the Roman Catholic and Greek Orthodox churches, most Protestant denominations, Jews, Muslims and humanists. The Church of Jesus Christ of Latter-day Saints is not listed as a member, but Mormons for Equality and Justice is cited as an affiliate.

Bryan Bland, a district manager over 11 Payday Loan outlets in Utah, rejected the coalition's allegations about his properties.

"We provide a service to a large and loyal customer base and have fairly strict policies for qualified people," he said, adding that all his stores clearly post everything required under the law.

"The state wouldn't allow us" to do otherwise, Bland added. "They do surprise audits so it's not like we can put the signs up or take them down at any time."
Results of the independent survey have been sent to the Department of Financial Institutions. Hilton hopes the information will compel the state agency to take the advocates' complaints seriously and to support oft-rejected legislation to cap lenders' interest rates and increase the penalties facing unscrupulous loan sharks.
Jerry Jaram, who oversees payday loan lenders as the department's supervisor of savings and loans and trusts, said he received the findings and is reviewing each allegation.

He had reviewed complaints against a half-dozen stores by mid-afternoon Friday, but had not found any cases in which department examiners ever issued citations for the violations alleged by the coalition.
 
"We do unannounced examinations on all payday lenders once a year," he said, in which inspectors ask questions about store policies and employee-training procedures, obtain sample contracts issued to all borrowers and observe whether signs accurately display interest charges and his agency's telephone number for dissatisfied customers to call.

Jaram disputed Hilton's contention his agency does not take consumer complaints seriously.
"I do pay attention to everyone who calls and complains," he said. "If someone calls and says, 'They were rude to me,' or, 'Their rates are too high,' there's not much I can do with that. But if they have a legitimate complaint, I have them write me a letter, I forward a copy to the payday loan lender and have them respond."
He said he receives about a dozen written complaints annually and feels lenders generally have been responsive.

As for interest-rate legislation, Jaram said legislators have considered a cap several times but consistently decided to "leave it up to the borrower to make the judgment whether the rate is in his or her best interest."
 





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