The dispute has simmered for years. Critics say it's ridiculous to collect utility payments at places they say provide loans at sky-high rates and target cash-strapped consumers. Customers pay off their utility bills but may find it too convenient to take out a loan to do so.
Utilities defend it as the best and most convenient option for some customers. And payday loan companies argue that very few utility customers paying their bills also take out a loan.
The issue erupted at a recent meeting organized by the
"We've been fighting this for years, and it's finally getting some momentum," said
Most utility customers pay their bill by mail or online. But a small percentage don't have a bank and have to pay in cash. A couple of decades ago, utilities had storefront locations that accepted payments, but those were closed to cut costs.
KCP&L said 2.6 percent of its customers now use walk-in authorized pay stations, such as grocery and convenience stores. But the utility has an arrangement with eight of those authorized pay stations in
"We only use one when we have no other way to have a walk-in payment option," said
The utility has had no complaints from customers about using payday lenders, McDonald said.
The payday loan industry is often the target of criticism, especially in
"Payday lending often perpetuates an endless cycle of debt for consumers who can least afford it," he said in a statement.
"People who turn to high-interest loans are desperate for money," she said, "especially if they've fallen so far behind on payments that their utilities are turned off."
It contended that very few utility bill payment customers took out payday loans. And it pointed out that the
"We strongly contest the unsupported opinion that payday loan stores are taking advantage of bill pay customers,"
In 2009, the PSC staff reviewed the issue and didn't recommend that utilities stop using payday lenders to accept payments. In 2011, regulators said the relationship between the lenders and utilities was a concern, but it wouldn't seek to ban them.
"A bill payment at these locations ... becomes an opportunity to solicit the utility customer to borrow money at an extremely high rate," the
(c)2014 The Kansas City Star (Kansas City, Mo.)
Visit The Kansas City Star (Kansas City, Mo.) at www.kansascity.com
Distributed by MCT Information Services