This is an archived article that was published on in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Utahns have pride in the strong tradition of the state's larger newspapers in providing balance and perspective. Citizens especially rely on the Salt Lake Tribune in discerning fact from fiction. Unfortunately, this Pulitzer-winning publication printed a story that falls below their high standards.

A recent article about payday lending lawsuits in Utah misleads its readers by using incorrect information presented as facts. The reporter who authored this story has followed our industry for many years. When he informed us he was working on a report about payday loan lawsuits, we were pleased to see his initial findings were backed by the methodical research expected from journalists covering our industry.

We appreciate the opportunity to respond and offer our perspective, which is that the 7,927 lawsuits against borrowers — representing a 30 percent decrease since 2009 according to an article written by the same reporter in 2010 — comprise an extremely small percentage (1 percent) of the 700,000 payday loans issued in Utah during the last fiscal year. Upon reading the article, we were dismayed at how the facts were twisted.

For instance, the article begins with an anecdote of a South Salt Lake resident, who claimed to have incurred nearly $10,000 of debt from payday lenders, which was cited as the cause of his bankruptcy. Following the publication of this story, a review of the public records of this individual showed that only a small fraction (1.2 percent) of his total debt was from payday lenders, totaling $2,075. This information was readily accessible to us and certainly to the reporter, yet this critical distinction between what the individual told the Tribune and the actual facts was not made clear.

The story also neglected to state that this individual's bankruptcy occurred in 2013, before several new payday lending reforms went into effect. Dismissing the success of that legislation and distorting alleged issues that occurred several years ago to illustrate a problem that has already been addressed by legislation was irresponsible and unwarranted.

In addition, there are several laws designed to provide additional protection for the small subset of Utahns unable to repay their payday loan in 10 weeks. No other financial institution allows an outstanding loan contract to cease interest while offering an extended payback period at no additional cost. This interest-free extension is unique to payday lenders; however, it is rarely used as the average payday loan in Utah is repaid in full in 29 days. The latest Utah Department of Financial Institutions annual report found only 6.59 percent of customers entered into an extended payment plan, underscoring that these new reforms are working.

We were also disappointed by this story's inclusion of commentary critical of payday lenders from a source who apparently lacks any understanding of Utah's stringent regulatory framework for payday lenders. While we recognize this source, a University of New Mexico law professor, as a thought leader in higher education, she cited an outdated 2010 study of the New Mexico payday loan market, which has a completely different regulatory system from the successful one we have in place in Utah. She also made the outrageous claim that most borrowers eventually fail to pay off a loan, which is objectively false based on the Department of Financial Institutions annual report.

The article also quotes Rep. Brad Daw arguing that the number of lawsuits "put the lie to the notion that people pay back these loans on time, and without excessive penalties and interest." We dispute these claims because as established in the article, lawsuits are a highly irregular occurrence: only 1 percent of loans end up in a courtroom. In addition, fees on payday loans are highly regulated and interest is restricted to 10 weeks regardless of whether the loan goes to court or not. There are no significant penalties that can be charged on a payday loan.

Rep. Daw is also quoted saying that the number of payday-lender lawsuits have remained fairly constant for several years. Yet in testimony to the Legislature and other public forums, Rep. Daw stated over 14,000 court cases were filed by payday lenders. According to this story, the actual number of court cases is nearly half that.

At the end of the day, it is important to remember lenders want to cultivate a lasting relationship with their borrowers and ensure they can successfully repay their loans. For this reason they have underwriting and collection practices just like any other financial institution. Only after borrowers refuse payment arrangements with lenders are lawsuits filed as a last attempt to collect what is rightfully owed to them. There is simply nothing to gain from seeing customers default on their loans.

We welcome discussion and debate about the state of our industry, but we ask that these arguments be presented with proper context and grounded in facts and research.

Wendy Gibson is a spokesperson for the Utah Consumer Lending Association.