Utah's check-cashing and payday loan businesses have 30 days to register with the state, put up a few signs and run criminal background checks on their managers.
But several company officials said new regulations that take effect Thursday should have little overall impact on their businesses or their customers."It's something we can live with," Richard Rawle, president of Check City, said Tuesday. "In the long run, it will probably be better."
A law passed by the 1999 Legislature requires each of the state's approximately 120 payday loan and check-cashing businesses to register with the Department of Financial Institutions for the first time.
Check cashing businesses cash customer checks for a fee.
In a payday loan, a customer writes a personal check payable to the lender for the amount he wishes to borrow, plus a fee that often runs between $10 and $20 per $100 loaned.
The check casher agrees to hold the check until the customer's next payday, usually up to two weeks. At that point, the customer can either redeem the check with cash, let the check be deposited or renew the loan by paying another fee.
Utah's new regulations say check-cashing and payday loan businesses must post a complete schedule of interest or fees they charge for a loan, using dollar amounts. They also must post the telephone number of the Financial Institutions Department, 1-801-538-8830, for customers who have questions or complaints.
The law further says all payday loans must be documented through a written contract that is reviewed with the customer, and that no loans may be renewed, or rolled over, for more than 12 weeks.
Jerry Jaramillo, supervisor of savings & loans and trusts for the Financial Institutions Department, said businesses will have 30 days after July 1 to register and make other necessary changes. Initial registration will cost each business $300, with $100 for annual renewal.
The one-page registration form asks 12 questions, including whether business owners and managers have been charged with or convicted of a felony or had any licensing actions taken against them.
"(Legislators) wanted to make sure that there were no deceptive practices out there, and that is what this law does," Jaramillo said. "The more disclosure there is, the more people . . . can do comparison shopping. They will be aware of what their end of the contract is."
Rawle, who also serves as president of the Utah Consumer Loan Association, said he is not expecting any difficulties in dealing with the new state regulations at his two Utah stores, in South Salt Lake and Orem.
"I think it will be beneficial," Rawle said. "I do like the criminal background check that everybody's required to do. Not that I know anybody who is a crook in the business, but it makes it a little bit cleaner, I believe."
He said most of the businesses already post and explain their fees and interest rates, and he has rarely let customers roll over their loans for more than 12 weeks in the past.
"I'm pretty confident that everybody in the association is doing a very good job and is up front with everything," Rawle said. "But there are people out there who are not in the association, and I don't know how they're operating."
David Truong, manager of Check Max in West Valley City, said he doubts his customers will notice any difference after the regulations take effect.
"We never have any complaints about this post-dated (check) thing," Truong said. "They come in and appreciate what we've done for them. We've never had any problems at all."
The new law does not set caps on the fees or interest rates the businesses can charge, but Rawle said competition is taking care of that.
"I suspect that the next thing to happen is rates will come down to a point where you have to be awfully efficient to make it work," he said. "Like any other business, supply and demand will weed out a lot of people. It's just good old American free enterprise."