SALT LAKE CITY (ABC 4 News) - It was a war of words between Utah credit unions and the Coalition of Religious Communities. CORC showed off a new report Tuesday they say shows 8 Utah based credit unions are now offering payday loan products to their members. The Credit Unions say otherwise.
Linda Hilton, director of CORC said "Utah has more credit unions than any other state that are offering payday lending."
CORC says Utah's credit unions are selling its members pay day loans with high interest rates to members who have so little to begin with, they can't afford to pay them back.
Hilton said, "the credit unions that are here are offering a good alternative product to payday loans that are at 0% interest. But if you look at the fees, it ends up being 254 to 318%."
CORC sent letters to the credit unions, outlining what they see as a problem. But the credit unions say these threats are not reality.
Scott Simpson, president and CEO of the league of credit unions, said "Whatever utopia that they're hoping for seems to want to free people that are the highest risk borrowers in America from having any consequences from the borrowing that they create."
Credit unions say these loans are dangerous to begin with. Only about 1% of their members actually need them, they are short term and usually needed only if someone doesn't have the credit to get a traditional loan.
According to credit unions, these loans may look like a payday loan, but with key differences from their members.
Simpson said, "we are confident we are offering the best alternative in the market."
Some members of these credit union's that are supposedly selling these payday loans also spoke Tuesday. They made it very clear, they expect more from the group holding their money.
Paige Thornock is a member of Cypress Credit Union she said, "I am very frustrated and disappointed that cypress credit union would offer these types of products and steer their members towards these types of predatory products."
Dorthy Talbert, a member of Mountain America Federal Credit Union, voiced her opinion too. She said, "I don't
think I'll stay there."
CORC has been fighting payday loans for years now and they continue to threaten to pull their memberships in Utah credit unions. At the same time, ULCU said they are providing the best solutions for their members.To see the full report from the National Consumer Law Center, click here