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Utah regulators want increased reporting requirements for payday lenders

Utah regulators want lawmakers to require more data from "payday lenders" to help show whether those lenders are fair businesses providing needed emergency money to people with poor credit, or are essentially legalized loan sharks that often trap people into deep debt.

"Additional data collection is probably warranted so we can better understand the industry in Utah," Ed Leary, commissioner of the Utah Department of Financial Institutions, told the Legislature's Business and Labor Interim Committee today.

He endorsed goals of a working group of legislators who are interested in the topic. Among their recommendations, they call for finding out how many payday loans are really paid on time; how many are extended; what interest rates are charged; how many loans are made overall, and for what total amount; and in what zip codes or places such loans are being made.

The industry and its critics now often battle over that data. "We have had he-said-she-said kinds" of battles, said Rep. Lou Shurtliff, D-Ogden. "This will give us some data to find out what is really happening."

Both critics and supporters of the industry have concerns over the proposal. Critics worry it may allow the state to collect information but not mandate that findings be made public. Industry supporters said reporting such data may be too costly and intrusive. Industry spokesmen said they have not yet had time enough for review to be able to determine a stand.

"Payday loans" are usually given for two-week periods for amounts from $100 to $1,000. The median annual interest on them in Utah is 521 percent, or about $20 in interest for two weeks on a $100 loan. Critics contend the needy often cannot pay them off on time, and take out more loans at the astronomic rates to cover them — trapping themselves in debt.