Two Utah Bills Target Payday Loan Companies
Utah Senate Bill 16, pending Governor Jon Huntsman Jr's signature, would bar payday loan companies from using the state's bad-check law to collect on payday debts. The bill would also allow the state to levy fines up to $500 for any payday lenders who do not register with the state.
Utah House Bill 329, still awaiting committee assignment, would require payday lenders to provide more disclosure about actual fees and penalties to consumers who apply for loans. The bill would also bar payday loan companies from providing additional loans to consumers who are still paying off a prior loan.
While both these bills establish regulations that would ultimately protect consumers, one important issue is not addressed. The state does not have an usury law in place to prevent lenders from charging consumers unreasonable interest rates. Utah payday loan companies sometimes charge more than 500% interest on payday loans and will continue to do so unless legislators pass additional laws to limit the rates.