Payday Loan Database: A Big Brother Government Solution

A mandated database in Utah would impose an administrative burden and hurt consumers

To limit the ability of payday lenders to provide consumers with multiple loans, some Utah legislators are misguidedly advocating for a database. This “solution” could potentially force payday loan customers to use unregulated offshore and out-of-state Internet lenders—who fail to provide the strong consumer safeguards already enacted by Utah’s legislature.

THE PEOPLE’S VOICE: NO DATABASE

 

Payday loan customers overwhelmingly oppose the government monitoring and restricting their financial choices and transactions.

THE PERILS OF A GOVERNMENT DATABASE

Still, some advocates are pushing to collect more private data about the lives of law-abiding Utahns with potentially damaging consequences:

Data breach
liability

Increase cost
to consumer

Monitor sensitive
personal information

GOVERNMENT DATABASES HURT COMMUNITIES

A government-run payday loan database has been done before, and it failed on all fronts.

data-wash

In 2010, Washington imposed an annual payday loan limit, sending borrowers to the Wild West of unlicensed Internet lenders.


RESULTS OF DATABASE:

“The evidence would seem to indicate that consumers are seeking higher cost, unregulated products.”
-Rep. Steve Kirby

35% increase of total complaints filed

100+ complaints against unlicensed Internet payday lenders

data-bill

Only one year after implementation of the database, Rep. Kirby, a former supporter of the loan limit legislation, introduced a bill to repeal the law.

We must learn from the past and not drive consumers away from regulated products in Utah.

A PROVEN SOLUTION: CREDIT BUREAUS

Government should not intrude into an area of lending due diligence that payday lenders handle like every other credit industry–through private reporting agencies.

Used by every lender in the UCLA to ensure borrowers are not overextended, this secure private market solution is superior to a government database in every way.

REAL PEOPLE, REAL STORIES