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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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