They Loan You Money. Then They Get A Warrant For Your Arrest

The presence of 417 payday and title loan stores in Utah — more than the number of McDonald’s, 7-Eleven, Burger King and Subway stores combined — is symptomatic of an age in which financial precariousness is widespread. Across the country, wages have stagnated for decades, failing to keep up with the cost of living. That helps explain why 12 million Americans take out payday loans every year, according to Pew Charitable Trusts. As an often-quoted study by the Federal Reserve Board has noted, a quarter of adults in the U.S. would not be able to handle an unexpected $400 expense without borrowing or selling something to pay for it.

Twelve million Americans take out payday loans each year, according to Pew Charitable Trusts, including in Utah, a state with one of the lowest unemployment rates in the country.

There’s also a policy reason behind the ubiquity of payday lenders in Utah. After the U.S. Supreme Court relaxed restrictions on interest rates in 1978, Utah became one of the first states to scrap its interest rate limits in the hopes of luring credit card and other finance companies. A favorable regulatory climate in Utah made lenders feel welcome. The first payday loan store opened in Salt Lake City in 1985, and other companies soon flocked. Today, Utah is home to some of the most expensive payday loans in the country. The average annual interest rate hovers at 652%, according to the Center for Responsible Lending, a nonprofit research and policy organization. (The center was started with support from the Sandler Foundation, which is also a major funder of ProPublica.) Payday lenders charged annual percentage rates as high as 2,607% in 2019, according to the Utah Department of Financial Services. Utah is one of six states where there are no interest rate caps governing payday loans.

When it comes time to pay, just a few weeks after getting a loan, most borrowers find they can’t afford to do so, according to the federal Consumer Financial Protection Bureau. As a result, the vast majority of payday loans — 80% — are rolled over or renewed within two weeks. Most loans go to borrowers who have taken out at least seven loans in a row. Many people pay more in fees than the amount borrowed and get stuck in a cycle of debt. Payday lenders counter that they offer a crucial service to people with poor credit. Loans for Less says it helps people who are short on rent, behind on utility bills or at risk of overdrafting on their bank accounts. Many of the company’s customers can’t qualify for bank loans, credit cards or a paycheck advance. “It’s not our intention to take people to jail over debt,” the company wrote in a statement. “Warrants are issued for their failure to appear in court. We are more than willing to work with our customers.”

The federal government has never regulated payday lenders. Under the Obama administration, the CFPB began the laborious process of drafting federal regulations. The agency finished writing what were meant to be the final rules in 2017, after the Trump administration had taken office. The most notable provision would require payday, vehicle title and some installment lenders to ascertain, in advance, a borrower’s ability to repay the loan without sacrificing basic living expenses like rent and food. The industry aggressively lobbied against the provision, which would have curtailed its profits, and so far it has not gone into effect. The Trump administration has delayed the payday lending rules and is considering a proposal to gut them.

Utah has a favorable climate for high-interest lenders. As a result, it’s home to 417 payday and auto title loan stores. In the absence of federal regulation, rules vary wildly among states. Fifteen states and the District of Columbia have banned payday loans entirely. A handful have strictly limited the industry. For example, South Dakota, once a leader in lifting interest rate limits, voted in 2016 to cap rates for short-term loans at 36% APR. Payday lenders have since left the state.

In Utah, by contrast, efforts to regulate the industry have faced fierce opposition. In 2009 and 2012, two bills, one to cap payday loans at an APR of 100% and a second to prevent lenders from issuing more than one loan per consumer, both failed. The second bill prompted the industry to flood the sponsor’s constituents with robocalls and direct mail, contributing to his defeat at the polls. (He won again in 2016). In 2014, Utah lawmakers passed their bill to allow bail to be paid to creditors in civil cases. Over the past few years, there’s been a steady resurgence in the number of small claims suits filed by high-interest lenders. The numbers are now approaching the previous peak, which occurred during the Great Recession. Peterson’s study found that, in addition to the high volume of suits, lenders had a lower-dollar threshold for suing than others do: Lenders took people to court for a median of $994, about one-third of the median amount claimed by other plaintiffs.

“They just fight more aggressively,” Peterson said. It’s unclear how many people across the country are arrested every year for missing hearings over payday loans. Tens of thousands of arrest warrants are issued every year in debt-related lawsuits, according to the American Civil Liberties Union, which examined cases in 26 states in a 2018 report. Arrest warrants were issued against debtors who owed as little as $28.

David Gordon, who was arrested at his church after he failed to repay a high-interest loan, works on his roof in Richmond, Utah. Some policymakers have proposed a federal interest rate cap that would effectively ban payday loans. In May, presidential candidate Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., introduced the Loan Shark Prevention Act, which would cap interest rates at 15%. Last month, a group of lawmakers introduced the Veterans and Consumers Fair Credit Act, which would extend the 36% interest rate maximum for active-duty service members to everyone. “You have to ask yourself, if it’s immoral to give this type of loan to somebody who is in the military now, how is it OK to give the loan to anybody else?” said Rep. Glenn Grothman, R-Wis., the only Republican sponsor of the bill. Both bills will face substantial difficulty getting through the Senate, according to experts. Advocates are also calling on state legislatures to take action. The ACLU would like to see a complete ban on arrest warrants in debt collection cases. In the absence of this, consumer advocates have recommended a number of reforms: creditors should give consumers 30 days notice before filing a lawsuit; they should do more to verify that a consumer lives at an address on file; debtors should be immediately released after a warrant is served or taken to a hearing on the same day that they are arrested.

In December 2016, Jessica Albritton took out a $700 auto title loan from Loans for Less. Albritton had four kids under the age of 8 and barely scraped by on her $10-an-hour wage. It had been a hard year. Christmas was coming up. Albritton used the title of her 1984 Fleetwood trailer as collateral. She signed a contract with a 192% APR. If Albritton fulfilled the agreement, she would be paying $1,383.76 over six months to extinguish a $700 loan. On Christmas morning that year, her children woke up to gifts from Santa Claus: new clothes and shoes, Legos and other toys. They recounted the day in a journal tucked inside a compartment underneath the family’s nativity set. “We’ve written in it every year,” Albritton said, recalling the tradition that started before she had kids. “It’s literally almost full.” Albritton made some payments but struggled to keep up. She cut back her work hours to go to school part time to study cosmetology and barbering. The school fees ate at her budget. Bills like rent and car payments took priority. Albritton said she informed the company when she couldn’t meet a payment because of an electricity bill. “When times got hard,” she said, “they were not understanding.”

In April 2017, Loans for Less filed a small claims suit against Albritton in South Ogden. In Utah, the plaintiff is usually responsible for making arrangements to serve papers to defendants in a civil case. Instead of delivering the court notice to Albritton, records show, Loans for Less hired a constable who left the documents with her father.

Albritton with her children at home. Albritton missed the hearing at the end of July 2017. Loans for Less won the case by default. At that point, her outstanding balance was $1,239.96. The company also asked her to shoulder the cost of filing the case and hiring a constable to serve the papers.Two months later, Albritton missed another hearing. She’d run out of vacation days and couldn’t take time off, she said. The judge issued a bench warrant, setting the bail at $200. James Houghtalen, the constable hired by Loans for Less, served the warrant on a Sunday morning. “She informed me that I woke her upon my arrival,” he wrote in his notes, which were included in a court filing. Houghtalen gave her the option of paying $200 in bail or going to jail. Albritton didn’t have the money, so her mother paid, borrowing the $200 from Check City, another payday lender. Two weeks later, Albritton filed for Chapter 7 bankruptcy. “They were constantly after me,” she said. Filing bankruptcy shields debtors from collections, at least temporarily, but the process can be cumbersome and expensive. Albritton wasn’t able to complete her case; it was terminated on Jan. 29, 2018.

The next day, Albritton got up early and pulled into the parking lot at work. It was cold outside. As she stepped out of her car, someone called her name. Houghtalen, the constable, had been waiting for her. “You didn’t show up to court,” he said. Confused, she responded, “But I have a bankruptcy case.” Without further explanation, Albritton asserted in an interview with ProPublica, Houghtalen “slammed” her against his car and handcuffed her. Albritton said the constable didn’t give her a chance to pay and took her phone away so she couldn’t make any calls. Albritton was taken to Weber County Jail, where she was held in a cell with other women. She was released four hours later after paying another $300 in bail. That money, along with $200 in bail from the previous arrest, was forfeited to Loans for Less.

Houghtalen delivered the borrower to jail in every such case ProPublica could find involving Loans for Less. He has a history of misconduct, according to public records. In 2013, the Utah Peace Officer Standards and Training Council concluded that he had failed to turn in $450 in cash from two defendants. Houghtalen told investigators he didn’t know what happened to the money. The council suspended his peace officer certificate for three years as a result. Houghtalen is also the subject of an ongoing disciplinary investigation, according to the Utah Department of Public Safety’s response to a public records request. The department declined to comment on the specific charges. Houghtalen did not respond to multiple requests for comment. Loans for Less said it was unaware of the ongoing investigation. After Albritton’s arrest last year, Loans for Less tried to garnish her wages. That effort was stymied, Albritton said, because 25% of her paycheck was already being withdrawn over an unpaid electric bill.

Albritton’s life began spiraling as her debts mounted. In March 2018, she split up with her partner. Albritton and her four children moved into a domestic-violence shelter and then a government-subsidized apartment. Her ex surrendered the trailer to Loans for Less against her wishes, she said. The company sold it at auction for $500 but continued to pursue her for the remaining balance. Albritton agreed to contribute $25 a week but then struggled to pay up. Loans for Less re-initiated legal proceedings. (“We’ve been willing to work with her a ton,” said Kimberly Jones, the legal manager at Loans for Less. “I don’t want anyone to go to jail.” Jones added, “from time to time she would make these arrangements and [then] she would just go MIA for three to four months and obviously not keep the arrangements.”) In late September, a constable came by and notified her of a new $400 warrant. On a Monday night a few weeks after that, Albritton stood in her kitchen, defrosting bags of frozen meat and green beans. The kids jumped up and down on the gray couch in the living room. The previous weekend, they picked pumpkins at a farm. She was going to take them trick or treating in her parents’ neighborhood. Albritton had a court date in two weeks. “This is too much for me right now,” she said. “I’m moving. I just had a death in the family. I have four kids. I have a friggin $10-an-hour job. It’s more than what I can handle.”

Albritton felt under constant scrutiny by Loans for Less. Her cellphone was filled with messages from constables. She scrolled through her phone, reading aloud text messages she said were sent by different constables. “This is what got me,” Albritton said, repeating one message: “Hi Jessica, if you want to see me again, just say so. Don’t keep putting it off so I have to come back.” Loans for Less occupies a bungalow south of Salt Lake City. A bold yellow banner outside declares the company offers the “lowest rates” with “no credit check.” Inside the store on the counter, a green pen holder has a different message on it: “If you think nobody cares if you’re alive, try missing a payment.”

A visit with a photographer in October and speaking to the company’s owner, Ralph Sivertson. The receptionist said he wasn’t in the office but promised to pass on a message. Our photographer obtained her permission to photograph the pen holder.

We were walking back to our car moments later when Sivertson bolted out into the parking lot. He was furious about the pen holder photo. “It’s a joke!” he said.Sivertson, 54, has a stocky build and salt-and-pepper stubble. He was reluctant to be interviewed, he said, because he thinks payday lenders get a bad rap. Sivertson said he’s in business to help people. But he was also blunt about how integral lawsuits are to his operation. “At this point, small claims court is in the model,” he said. “If we didn’t have that avenue, I’ll be honest … we could be out of business.” When we asked about arresting customers, Sivertson said he had heard about it happening a few times. “I don’t see a need for that. I don’t like it. And I’m going to make sure that doesn’t happen.” He then insisted that constables should have some discretion to arrest debtors who are threatening or belligerent. He promised to take a second look at the practice. “That’s unnecessary,” he said. “Not over a $500 loan.”

Two weeks later, another constable working for Loans for Less texted Albritton about an upcoming court date. “My lawyer told me not to go,” Albritton texted back. “She is taking care of it.” “Okay,” the constable wrote. “I was hoping that I wouldn’t have to come out and arrest you for not appearing so I am glad that’s not going to happen.”

WOW!!!! This is unbelievable!!!!

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