To find out, Peterson posed as an uninformed customer and went into 26 stores to ask questions. He found a number of violations of the 1999 law. Most companies failed to conspicuously post interest rates, and 17 lenders would not provide a contract before first approving the loan. Rules are being broken because the Department of Financial Institutions is negligent in its enforcement of the 1999 act, according to the study. Included in the report is a statement by an anonymous employee of the department, who admits less than one-twentieth of the agency's personnel hours are spent enforcing the law.
Somebody needs to put pressure on the department to follow the rules.
The study is particularly important in light of the recent revision of the Bankruptcy Code by the U.S. Congress, according to Flynn. Peterson's report chronicles the history of consumer credit in Utah, tracing the growth of the industry in since 1985, when a law was passed that eliminated interest rate caps. During that legislative session, the Utah Senate debated the issue on the Senate floor for less than a minute, according to Peterson. Since then, the number of post-dated check cashing services in the Salt Lake Valley has grown from zero to 75. According to Flynn, Utah has always been a state where fraudulent security and loan practices have flourished.