Cecila Avila was finishing a work shift at a Walmart. David Gordon was at church. Darrell Reese was watching his granddaughter at home. Jessica Albritton had pulled into the parking lot at her job, where she packed and shipped bike parts.
All four were arrested by an armed constable, handcuffed and booked into jail. They spent anywhere from a few hours to a couple of days behind bars before being released after paying a few hundred dollars in bail or promising to appear in court.
None of the four, who live in northern Utah and were detained last year, had committed a crime. They had each borrowed money at high interest rates from a local lender called Loans for Less and were sued for owing sums that ranged from $800 to $3,600. When they missed a court date, the company obtained a warrant for their arrest.
Avila was handcuffed and marched down the main aisle in the Walmart in front of customers and co-workers. “It was the most embarrassing thing,” said Avila, 30, who has worked at the store for eight years. At the time of the arrest, Loans for Less had applied to garnish her wages. “It just didn’t make any sense to me,” she said. “Why am I being arrested for it?”
It’s against the law to jail someone because of an unpaid debt. Congress banned debtors prisons in 1833. Yet, across the country, debtors are routinely threatened with arrest and sometimes jailed, and the practices are particularly aggressive in Utah. (ProPublica recently chronicled how medical debt collectors are wielding similar powers in Kansas.)
Technically, debtors are arrested for not responding to a court summons requested by the creditor. But for many low-income people, who are not familiar with court proceedings, lack access to transportation, child care options or time off, or move frequently and thus may not receive notifications, it’s a distinction without a difference.
Reese, a 70-year-old Vietnam veteran, said he missed a hearing because he couldn’t afford to put gas in his car. Gordon, 46, said he was never personally notified of the court date. Avila and Albritton, 32, said they couldn’t take time off work.
In Utah, payday lenders and similar companies that offer high-interest, small-dollar loans dominate small claims court. Loans for Less, for example, filed 95% of the small claims cases in South Ogden, a suburban city of 17,000 about a half-hour north of Salt Lake City on the interstate, in fiscal year 2018, according to state data.
Across Utah, high-interest lenders filed 66% of all small claims cases heard between September 2017 and September 2018, according to a new analysis of court records conducted by a team led by Christopher Peterson, a law professor at the University of Utah and the financial services director at the Consumer Federation of America, and David McNeill, a legal data consultant and CEO of Docket Reminder.
Companies can sue for up to $11,000 in Utah’s small claims courts, which are stripped of certain formalities: There are rarely lawyers, judges are not always legally trained and the rules of evidence don’t apply.
Lenders file thousands of cases every year. When defendants don’t show up — and they often don’t — the lenders win by default. Once a judgment is entered, companies can garnish borrowers’ paychecks and seize their property. If borrowers fail to attend a supplemental hearing to answer questions about their income and assets, companies can ask the court to issue a bench warrant for their arrest.
Arrest warrants were issued in an estimated 3,100 small claims cases during the period studied by Peterson’s team. Almost all of the warrants — 91% — were issued in cases filed by payday, auto title or other high-interest lenders. The number of people who are jailed appears to be small. The state does not track the information, but ProPublica examined a sampling of court records and identified at least 17 people who were jailed over the course of 12 months.
Most people scramble to meet bail to avoid being incarcerated. Others, like Avila, Gordon and Albritton, are booked into jail and held until they pay. They often borrow from friends, family, bail bonds companies and even take on new payday loans.
“Bail” has a different meaning in Utah than it does in other states — one that tilts the power even more in the direction of lenders and other creditors. In 2014, state legislators passed a law that made it possible for creditors to get access to bail money posted in civil cases. Prior to that, bail money would return to the defendant. Now, it is routinely transferred to high-interest lenders. The law has transformed the state’s power to incarcerate into a powerful tool to guarantee that loan companies get paid.
As Peterson put it, “They’re handcuffing and incarcerating people in order to get money out of them and apply it towards insanely high interest rate loans.”
Small claims cases are heard once a month at City Hall in South Ogden, a former frontier town nestled between Hill Air Force Base and the Wasatch Mountains. On a sunny Monday morning in July, I walked past black-and-white portraits of City Council members and paused in front of a metal detector outside the courtroom on the ground floor.
“Are you here for small claims court?” a bailiff asked.
“Yes,” I said.
“You can check in with her,” he said, pointing at a makeshift station in a hallway in front of the courtroom. “You probably won’t need to go inside to see the judge.”
The person standing at a high-top post office-style table a few feet from a wall decal that read “Welcome to the South Ogden City Kiosk” was not a court official.
She was Valerie Stauffer, 44, a senior collections officer with Loans for Less. Reddish-brown hair tied back, the bespectacled Stauffer clutched dozens of beige and blue file folders, one for each borrower whose case was on the docket that day. She then piled them into a foot-high stack on the table next to her car keys and phone.
Loans for Less offers auto title and installment loans, which are higher-stakes versions of payday loans. Traditional payday loans, often for sums in the low hundreds of dollars, are typically due on the borrower’s next payday. The loans carry interest with annual percentage rates that run into triple digits. Borrowers provide postdated checks or access to their bank account as collateral. Auto title loans involve similarly stratospheric interest rates — Loans for Less charges up to a 300% APR — and larger sums of money, since the money is secured by the title to a borrower’s car. The loans are then paid back within a month, or in installments that might stretch over several months.
Loans for Less has six employees across two branches in Salt Lake City and Ogden. More than half of its borrowers, the company said, are repeat customers. The company’s website promises to help borrowers “get the cash you need” for the “lowest possible rates.” Loans for Less, the website says, is “up-front, fair, and honest with everyone.”
At 9 in the morning, there were already a handful of defendants lining up to meet with Stauffer. She quickly leafed through the stack to identify a borrower’s case and spoke to each one in a hushed voice. Stauffer handed out questionnaires requesting details of each person’s financial life: employer’s name, bank account numbers, whether the defendant rents or owns a home.
I spoke to Stauffer in between her meetings. She said that Loans for Less is “a little more aggressive than most.” Not all lenders will take borrowers to court, garnish their wages or request bench warrants, she said. Stauffer quickly added that she tackles the “more extreme” cases: “The ones that have taken the money and ran,” she said. “The ones who have no intention of paying their money back.”
Zachery Limas and his wife, Amber Greer, both 24, waited in the lobby area for their audience with Stauffer. Limas had borrowed $700 from Loans for Less last summer for a down payment on a 2012 Hyundai Santa Fe, an SUV with enough space to accommodate car seats for three children, one of whom was then on the way. (Limas and Greer had another loan with a different company to cover the balance of the purchase price.) Since the $700 loan came with a 180% APR, Limas would have to pay back around $1,400 — double the amount borrowed — within 10 months. At the time, he earned $16.87 an hour driving a forklift at a warehouse; she worked at Subway.
Limas said he made a few payments before a new owner took over his employer and he was laid off. By the time he found a new job, Greer had given birth to their child and stopped working. With his entire paycheck going toward basic expenses like rent and electricity, they could no longer afford to pay back the loan. In March, Loans for Less won a default judgment against Limas for $1,671.23, which included the outstanding balance plus court fees. “We can’t catch up. We can’t do this,” Greer said. “There’s no way we’re ever going to catch up, especially not with the interest rate that they have.”
After Limas missed a court date for the second time, a constable came to their home, threatening to take him to jail unless he paid $200 in bail at the door. “Obviously, we don’t have extra money like that lying around,” he said. Greer called a friend of her mother’s and borrowed the money, jotting down her card details over the phone.
Standing outside the courtroom, the couple told Stauffer they had met with a lawyer and planned to file for Chapter 7 bankruptcy, which would put the lawsuit on hold and eventually discharge their debts. Stauffer was not sympathetic and tried to persuade them to agree to a payment plan. “Even if they’re broke,” Stauffer said later, “we’ll set up $25 a month.” The couple refused.
Limas and Greer say they went to court planning to speak to a judge. After addressing their case with Stauffer, they asked her if they were “good to go.” When she said yes, according to Greer, they took that to mean that they had fulfilled their obligations at the courthouse. Limas and Greer left. They were absent when their case was heard before a judge an hour later.
These hallway negotiations between payday lenders and borrowers are ubiquitous in small claims courts across Utah. They raise red flags, according to consumer advocates. Borrowers are typically unfamiliar with the courts and can’t afford to hire lawyers; collectors deal with dozens of cases every month. Consumers might not understand that they are meeting with a representative from a payday loan company rather than a court-appointed official, said April Kuehnhoff, an attorney at the National Consumer Law Center. They might not understand that they have a right to a hearing before a judge or that government benefits like Social Security and disability are exempt from collection. “The settlement agreement just gets rubber-stamped by the court and people get railroaded through this process,” she said.
Stauffer maintained that she is trying to help. “We try and set up arrangements outside of court to make it easier on them. That way, they don’t have to go in front of the judge,” she said. “Any judge intimidates people, so it’s easier just to try and set up arrangements outside.”
At a quarter to 10, Stauffer gathered her folders and walked inside the courtroom. She had 52 cases to be heard, which represented all but two of the cases on the court’s docket that day. Stauffer had been able to strike a deal with a handful of debtors. None of them followed her inside the courtroom. I sat with a handful of people in the gallery.
Judge Bryan Memmott was presiding. Temporarily stationed in South Ogden, he spends most of his time handling minor criminal and civil matters in the justice court in Plain City, about 15 miles away. A former partner at a small law firm near Phoenix, specializing in real estate and bankruptcy law, Memmott began his legal career in the Judge Advocate General’s Corps in the Air Force. He seemed at ease with Stauffer and talked to her as though they were colleagues. (Memmott declined to be interviewed for this article.)
“Why don’t you tell me what cases you’ve got and we’ll go through them that way?” he said.
Stauffer laughed. “OK,” she said. “So I’ll go in alphabetical order.”
The judge moved quickly, approving judgments as soon as Stauffer shared a defendant’s name and the amount they owed. When the judge lingered once on a case for more than 30 seconds, he begged her pardon: “Sorry. My computer’s being a little slow. I was going between screens. I apologize.”
“No, you’re OK,” Stauffer said.
In many cases, a judgment had been previously entered and borrowers had missed the follow-up hearing. “Can we get a bench warrant?” Stauffer asked in one such case. Memmott obliged, setting the bail amount at $200.
During the half-hour hearing, Memmott issued 21 such warrants. He never refused a request by Stauffer.
When they came to Limas’ case, Stauffer told the judge that Limas had paid $200 in bail but had told her he was planning to file for bankruptcy. “We were going to set up arrangements,” she explained. “He walked out.”
Memmott didn’t wait for Stauffer to request that the Limas’ bail be transferred to Loans for Less. “He hasn’t filed bankruptcy yet,” the judge said, “so we’ll forfeit the bail [to the company] and issue a new warrant. If he files bankruptcy, we’ll stay the proceedings.”
“So, what’s your new warrant,” he said, glancing at Stauffer. “$300?”
“OK,” she said.
After the hearing was over, Stauffer stepped into the hallway to talk to a constable stationed by the metal detectors outside the courtroom. He works for Wasatch Constables, a company hired by South Ogden to serve as bailiffs in its courthouses.
The company is also deputized by payday lenders, who pay them a fee to serve warrants on debtors. S. Steven Maese, who was then Wasatch’s chief operating officer, defended his company’s work for payday lenders. “The biggest misconception, I would say, is that people think that they are being punished for owing money — they are not,” he said. “A warrant is a wake-up call to say that you need to comply with court proceedings.”
Stauffer lowered her stack of folders to the gray folding tables near the metal detectors. The officer leaned over and snapped a picture of an address in one of her folders, ready for his next job.
A few weeks after the hearing, a constable showed up at the home of Limas and Greer to arrest him. Greer said she was able to provide evidence of the couple’s bankruptcy filing and the constable went away, but not before informing her that court records indicated Limas had missed his court date.
At first blush, Utah would seem an unlikely home to a concentration of companies that specialize in peddling high-interest loans to low-income, often minority customers. Utah has one of the lowest unemployment rates in the country, and its population is more middle class and white than the rest of the U.S. Yet a quarter of the state’s population lives in a household that earns less than $39,690 a year.
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.
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.
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.
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 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.”
I visited with a photographer in October and asked to speak 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.”