Predatory Lending

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How 4 small Utah banks have taken 'predatory lending' national. It's all thanks to state law, critics say​

Story by Craig Harris and Amritpal Kaur Sandhu-Longoria, USA TODAY • Tuesday

Four small Utah banks have landed on a watch list by offering an increasingly common type of "predatory" loan to financially vulnerable Americans, according to a consumer watchdog group.

The banks are Capital Community Bank of Provo; FinWise Bank of Murray; First Electronic Bank of Salt Lake City; and Transportation Alliance Bank, or TAB Bank, of Ogden, according to the National Consumer Law Center, a Boston-based nonprofit that specializes in consumer issues on behalf of low-income people.

Because they are based in Utah, one of only seven states that don't limit the amount of interest charged on small loans, the four banks can export millions of dollars in loans with interest rates of up to 200% to low-income borrowers outside the Beehive State, a practice akin to loan-sharking, the NCLC claims. Those high rates, while legal, are far above the typical maximum rate on a consumer loan of 36.5%, the law center says.

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How 4 small Utah banks have taken 'predatory lending' national. It's all thanks to state law, critics say