MLGW to abandon payday lenders as part of its payment network

Memphis, Light, Gas and Water is working to abandon the 30 ACE Cash Express locations that accept payments for the city-owned utility, the utility's leadership told the Memphis City Council Tuesday.

MLGW CEO J.T. Young told the Memphis City Council that the utility had heard the public's concerns about the use of the payday lenders. He noted that the utility did not know if the thousands of customers paying their bills at the stores were taking out high-interest loans, but "[I] certainly understand the concern about what may happen."

The utility has contacted FirsTech, the third-party firm that set up 93 authorized pay agents where customers can pay their bills within one business day, about removing the 30 ACE Cash Express stores.

In a council presentation, MLGW said it would "work with FirsTech to ensure new authorized payment agents are business entities that reflect positively on MLGW and our community."

The utility's decision comes after The Commercial Appeal reported last week that it had collected $22 million from more than 133,000 payments made at ACE Cash Express stores. The utility, which serves a population that is 46.7 percent un-banked and under-banked, has no way of knowing if those paying bills are taking out loans at the same time.

RELATED: Why payday lenders accept millions in MLGW payments: ‘It gets people into the store.’

ACE Cash Express says 97 percent of the MLGW customers who pay their bills at its stores don't take out a loan within 24 hours.

On Tuesday, members of the City Council were muted in their criticism of MLGW's practice. In private, some of them expressed concerns, but, in public, they praised the utility's steps to remove the payday lenders. Some, particularly Michalyn Easter-Thomas, were keen to hear how quickly MLGW would remove the lenders.

Young assured the council it would be over the next three months.

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In an interview with reporters after the meeting, Young said MLGW was looking to replace the 30 ACE locations with about the same amount of other retailers to keep the same level of convenience for customers.

Most MLGW customers pay their bill through the utility's website, its mobile phone app, or by mail. The $22 million MLGW collected from ACE stores since late-2016 is a tiny fraction of the more than $3 billion in revenue the utility has collected in that time.

Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached by email at samuel.hardiman@commercialappeal.com.