Citizen Staff Writer
No longer will Southwest Gas Corp. steer customers to payday lenders to pay their gas bills in cash – effective now.
The company is terminating the lenders’ role as payment stations for its 1.8 million customers in Arizona, California and Nevada.
The stunning move to protect consumers comes after my June 12 Tucson Citizen column criticizing Southwest and Tucson Electric Power Co. for their relationships with payday lenders.
Tucson Electric is “committed to find another option” so it, too, can end its association with payday lenders, spokesman Joe Salkowski said.
Payday lenders, unfortunately legal in 38 states, charge extremely high fees on small loans, generating the equivalent of 360 percent interest or more.
The lenders are ubiquitous in poor neighborhoods, so they’re easily accessible to folks needing to make quick cash utility payments before their power is shut down.
That’s one reason 650 payday lenders are used to take cash payments for 21 large utility chains across the U.S., the National Consumer Law Center found in a June report “Utilities and Payday Lenders: Convenient Payments, Killer Loans.”
Why the sudden policy change at Southwest Gas? “It’s the right thing to do,” spokeswoman Libby Howell said.
Southwest’s consumer and community affairs staff was reviewing the policy, she said, and the Citizen column “was definitely the icing on the cake.”
“This is incredible and a great example of corporate leadership and responsibility,” said Kelly Griffith, deputy director of the Southwest Center for Economic Integrity.
“Sending a financially vulnerable consumer into a payday loan store to pay their utility bill is a recipe for financial disaster,” she said.
Studies have shown that most payday loans are obtained not for emergencies but to pay bills, Griffith said.
“I hope the leadership demonstrated by Southwest Gas will be indicative of a changing social, moral and economic understanding about predatory payday lenders,” she said.
Me, too. This greedhead industry made $40 billion in loans in 2005 – and spent $2.9 million last year on political campaigns and committees nationwide, lest its usurious ways be stopped.
As one friend said, “Cousin Vinnie with a baseball bat didn’t charge this much on a loan.”
Arizona legislators, who legalized the practice here in 2000, have yet to muster the courage to stop it.
Unless they have a change of heart such as that of Southwest Gas, Arizona’s only hope is that the 2010 sunset provision in the law is allowed to kick in.
But that’s three more years of payday lenders preying on the poor and financially vulnerable.
It seems criminal, doesn’t it? It ought to be.
Billie Stanton may be reached at email@example.com and at 573-4664.