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House limits payday loan rollovers, bars workplace collection and creates one-time extended payment option
Summary
House passed HB15 on Jan. 26, 2010, tightening payday-lending rules by capping loan rollovers at 10 weeks, prohibiting employer-based collection when the employee or employer asks, requiring lenders to offer a one-time extended payment plan per lender per year, and changing reporting on average loan terms. The bill passed 65–8 and was sent to the Senate.
The Utah House approved legislation on Jan. 26 to restrict common payday-lending practices and add consumer protections.
Representative James Dunnigan, sponsor of House Bill 15, said the bill would limit the total life of a payday loan to 10 weeks, ending the practice of continuing rollovers that in current law could run to 12 weeks. "So 1 thing this legislation does is limit these loans to 10 weeks," the sponsor said, adding that after the 10-week cap additional fees and interest would stop.
The bill also prohibits payday lenders from contacting an employee at his or her workplace if either the employee or the employer requests no contact. ‘‘If an employer or the employee requests that they not be contacted at their place of employment... then the lender is prohibited from trying to collect at that employee’s place of employment,’’ the sponsor explained.
HB15 creates an extended payment plan option: a borrower may, once per lender per 12-month period, request a 60-day extended payment plan during which no additional interest or fees may be charged. Sponsor Dunnigan emphasized the option must be requested by the borrower and will be disclosed in writing at the time of the loan.
Members questioned whether rollovers occur automatically and how eligibility for the extended plan would be enforced. Dunnigan responded that borrowers must request a rollover and must be given written notice of the extended-plan option when they take the loan.
Representative Falk and other members expressed support, noting frequent small-claims cases tied to payday loans and the disproportionate interest burdens on consumers. After debate and summation, HB15 passed the House 65–8 and will be transmitted to the Senate for further consideration.
