Rep. Brad Daw — who for years has battled high-interest lenders in Utah — says he was flabbergasted when he read that one of them is managing to jail borrowers who owe it money and then seize their bail.

“I thought, ‘I can’t believe this is happening,” the Orem Republican said.

Daw now is pushing legislation designed to stop the practice. In a surprising twist, he says payday lenders in Utah are supporting his bill, HB319, which was introduced Thursday.

“Payday lenders are very quick to note that it is not a payday lender who is doing that,” Daw said. “They are fully supportive of repealing the section of the code” that allows the bail seizure. He sees it moving forward in the Legislature without too much trouble.

ProPublica last year reported how Loans for Less — which offers auto title and installment loans at triple-digit annual interest rates — obtained warrants against people it was suing for nonpayment of loans.

The borrowers technically were jailed for not responding to a court summons requested by the lender, since it is against the law to jail someone because of an unpaid debt and Congress has banned debtors prisons since 1833.

Still, constables appeared and threatened arrest if people could not come up with hundreds of dollars in bail or are jailed until they can raise it.

ProPublica found at least 17 cases in which Utahns had, in fact, been jailed — anywhere from a few hours to a couple of days.

In 2014, state legislators passed a law that made it possible for creditors to get access to bail money posted in civil cases. Now, it is routinely transferred to high-interest lenders instead of being returned to defendants, as in most states.

“We’re just repealing that section completely” with the new bill, Daw said.

(Trent Nelson | Tribune file photo) Rep. Brad M. Daw, R-Orem, on Jan. 24, 2017.

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It also proposes many other changes in laws that regulate high-interest lenders. “It was a hard negotiation, but I think we’ve got consensus with all parties at this point," Daw said. “So I hope we can move forward without too much trouble.”

Among other changes proposed is closing a loophole that some payday lenders have used to avoid a law that requires them to stop charging interest on their loans after 10 weeks, and to offer a no-interest repayment plan.

“We found that there were certain payday lenders who are issuing a signature loan to basically get around the 10-week cutoff,” Daw said. The bill would ban that.

Daw also wants to lengthen from 10 days to 30 days a required window between notifying borrowers and taking them to court.

Finally, the bill would require the state to collect much more data annually about payday and other high-interest lenders. That includes how many loans that payday lenders make, the total dollar amount loaned, the number of borrowers who extended loans and the percentage of loans that are not repaid.

Daw’s frequent push for tougher regulation led payday lenders to funnel $100,000 in secretive donations to defeat him in 2012 (he was re-elected in 2014) with the help of former Utah Attorney General John Swallow. It was among the scandals that toppled Swallow and led to charges against him and former Attorney General Mark Shurtleff.

(Leah Hogsten | Tribune file photo) Mr. Money is located at 4128 S. Redwood and Access 2 Cash as 4132 S. Redwood.

The average rate charged by payday lenders in Utah last year was 522.26% annually, or $10.02 for a $100 loan for seven days.