Study raises questions about Utah short term lender's contractual requirements

A recent report by the multi-faith advocacy group Coalition of Religious Communities found that nearly 80 percent of the small claims cases handled by the district court of Provo, Utah, between January 2005 and June 2010 were related to short term loans, according to the Daily Herald.

 The CRC study also found that more than 70 percent of Provo's justice court cases were short term loan cases, and more than 62 percent of all Utah County cases were filed by short term lenders. Although there is some disagreement over the exact number of small claims cases covered by the city's district court, the number is thought to be in the range of approximately 23,200 and 24,700. According to Linda Hilton, one of the report's co-authors, Utah County-based short term lender Check City includes a clause in its lender contract that requires debt collection cases to be prosecuted in Provo, regardless of where the loan was taken out. "This is a secondary market loan product that is inherently set up to make money off of people's failure to repay," Hilton told the news source. A 2010 policy change transferred small claims cases such as those related to short term loans from the district court to the justice court. Provo Justice Court chief clerk Adriene Davis told the news source that as far as she was aware, the legality of the specification in Check City's contract had never been challenged. As part of the CRC's research, a coalition member attended a default calendar - a weekly hearing of cases for which defendants missed their court dates. According to Davis, defendants in short term loan cases are notorious for not showing up. She estimated that during a small claims calendar, 20 to 30 cases are handled - a number that rises dramatically to 200 to 250 during the default calendar. Approximately 90 percent of the cases heard at the default calendar on the day the CRC member attended were filed by Check City. This has prompted the coalition to question the financial impact on the Provo court system and surrounding jurisdictions, as well as the reasons behind the short term lender including the clause in its contract. In addition to its Provo location, Check City also operates in five other Utah County towns and cities, and five other counties in the state, according to its website.