Appeals Court Ruled in Favor of Payday Loan Borrowers

People in Salt Lake County defaulted on their payday loans, the lenders -- a company called Feria Access LLC as well as others -- sued them in Utah County. The borrowers failed to show up and Feria Access won the lawsuit and had the borrowers' wages garnished -- or automatically docked -- to recover the loan amount, interest and fines.  They got their payday loans in Salt Lake County not Utah County where they were sued.

A decision from the Utah Court of Appeals means the payday loan borrowers may still have a chance to fight a portion of that ruling. After their wages were garnished, the borrowers claimed that too much was taken out of their paychecks and went to court over it. A Fourth District judge initially threw that lawsuit out, but the court of appeals recently ruled that the complaint needs to be considered.

According to the court decision, the Utah Consumer Sales Practices Act, UCSPA is designed to protect consumers from dishonest business practices.

"The UCSPA creates a cause of action against a 'seller' who commits either a 'deceptive' or an 'unconscionable' 'act or practice ... in connection with a consumer transaction ... whether it occurs before, during or after the transaction,' " the decision reads. Jim Dalrymple Daily Herald Newspaper

Utah Legislature voted on several payday lender loans this legislative session but they ruled in favor of the payday lenders in every case.

SB110, sponsored by Sen. Ben McAdams, D-Salt Lake City, limited payday lenders in where they can sue delinquent borrowers.  79% of all small-claims cases at the Fourth District Court in Provo are filed by payday lenders.  SB110 required payday lenders to file in the court closest to where the payday loan application was made.  This ruling gives Salt Lake County residents a day in court, however it is still in Utah County Court. February 28, 2012 blog post

The following corporations and PACs donated AT LEAST $113,960.00 to Utah elected officials between 2008 and 2011.  Note this does not include 2012 donations.

Utah Consumer Lending Association                                     2009             $31,000.00

Utah Consumer Lending Association                                     2008             $49,150.00

Cash America International, Inc. Fort Worth Tx                    2011                  7,500.00

Cash America International Ft. Worth Tx                              2008                $7,250.00

Check Into Cash Cleveland TN                                              2008                $7,700.00

Cottonwood Financial Ltd.  Irving  Texas                              2008             $10,000.00

Checksmart Financial Company  Dublin OH                         2011                $1,360.00

                                                                                                     Total       $113,960.00

The following breakdown shows how hard it is to trace who has the money:

Utah Consumer Lending 2009 Expenditures Breakdown

Utah Republican Party  3/5/2009                                                                $6,500.00

Utah Republican Party   12/24/2009                                                            $5,000.00

Republican House Caucus  3/25/09                                                              $2,500.00

Salt Lake County Republican Party 3/25/09                                               $5,000.00

Utah House Republican Party 4/1/09                                                           $4,000.00

House Democrats 5/21/09                                                                               $500.00

Friends of Gary Herbert 11/9/2009                                                           $10,000.00

Note Utah Consumer Lending Association only filed reports in 2008 and 2009.  What PAC had this money in 2010 and 2011?

The Senate Business and Labor Committee defeated this bill on Feb. 1, 2012.

C Bramble, D Hinkins, J Valentine, and K Van Tassell all voted against this bill.

G Davis, K Mayne and T Weiler voted in favor of the bill and S. Urquhart was absent.

HB459 also requires Payday Lenders to register with the state if they want to collect interest and principal on their loans. Evidently, the Payday Lenders that don’t register with the state of Utah also DON’T contribute to the Legislators.  The Senate voted 24-0 for HB459, by Rep. Jim Dunnigan, R-Taylorsville, Senator Curt Bramble is the senate sponsor, and sent it to Gov. Gary Herbert for his signature, because the House already passed it.  Madsen, Morgan, Niederhauser, H Stephenson, and Urquhart did NOT vote for HB 459.

HB 459  modifies the Check Cashing and Deferred Deposit Lending Registration Act to address reporting requirements and the requirement to register.  If the lenders are NOT registered they cannot collect any principal or interest.  HB 459 removes a current requirement that they report how many loans are not paid off before they reach their legal extension limit of 10 weeks. Utah small-claims court records show that payday lenders sue an average of 11,600 loan defaulters a year.  Blog post during legislative session

Payday loans in Utah often charge around 520 percent on an annual basis, or $20 for every $100 loaned for two weeks. Reports last year show some charged up to 2,294 percent annual interest — or $50 on a $100 loan for two weeks.     Lee Davidson Salt Lake Tribune