The Daily Herald has run two articles in the past week about how payday loan lawsuits are clogging the courts.  Here is the first link and here is the second.

Startlingly, a recent study shows that payday loans constitute 62% of all cases filed in Utah County.

So why are they so high?  Two Utah laws contribute to the problem.

First, Utah has no usury law.  Any interest rate is legal.  This lets payday lenders charge any rate they want and that rate is enforceable in court.  Lenders sometimes charge up to 500% interest on those loans.

Second, Utah recently passed a law allowing employees of corporations to represent the corporation in small claims court.  In other words, payday lenders can avoid the expense of an attorney in their cases.  I’ve been in small claims court and seen a young person, obviously not law trained, handling dozens of payday lending cases for a corporate plaintiff.  This keeps costs down and makes it more economical for payday lenders to operate and file court cases.

Modifying either or both of those laws would slow down payday lending in Utah.