Report: Utility payments at payday lenders OK

Sunday, August 17, 2014 | 5:15 p.m. CDT

KANSAS CITY — The Missouri Public Service Commission staff is recommending not banning payday lenders from accepting utility bill payments.

In a report filed last week, the staff said it is unclear if the commission, which regulated the authority, has the authority to ban the practice, and no evidence has been found to prove consumers had been harmed.

Those in favor of the ban say utility customers who can't pay their bills are easy marks for payday lenders, who charge extremely high interest rates, The Kansas City Star reported.

"Staff recommends it not promulgate or initiate a rule making" said Natelle Dietrich, director of tariff, safety, economic and engineering analysis at the agency, which regulates utilities.

Supporters of the ban criticized the report and said they are hopeful the commission will ignore the staff's recommendation and impose the ban.

John Coffman, an attorney for the Consumers Council of Missouri, said the staff was wrong to suggest the commission does not have the authority to impose the ban because it oversees the billing practices of utilities that are authorizing payday lenders to accept payments for them.

"I think they're off base, and I think the commission will see it the same way," he said.

Utilities have said payday lenders are the most convenient option for some customers, particularly if they pay their bills with cash. Payday loan companies contend only a few customers paying their bills take out a loan.

Kansas City Power & Light Company said 2.6 percent of its customers use walk-in authorized pay stations, such as grocery and convenience stores. But the utility has an arrangement with eight authorized pay stations in Missouri and one in Kansas to offer check-cashing services or payday loans in areas where that is the only option.

This week's staff report said it was sensitive to concerns about possible abuse by payday lenders but said no evidence has shown that has happened.

"Perhaps the greatest single obstacle to regulation by the commission of the use of payday lenders as utility pay stations is the fact that such lenders are engaged in an entirely lawful, even if distasteful, business," according to the report.

Berta Sailer, co-founder of Operation Breakthrough, a Kansas City social services group, disputed the idea that evidence supporting the ban does not exist. She said she has seen what can happen to desperate families who are mired in debt from high-interest loans.

"When you have kids who are cold in the winter, you'll get a loan you can't afford," she said.

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