MLGW payday lender deal hints at deeper problem in Memphis

In 2018, after listening to a report at the National Civil Rights Museum about how poverty still hampers black Memphians 50 years after the assassination of Martin Luther King Jr., Kenneth Robinson, CEO of United Way of The Mid-South, stated that Memphis’ history was one of a “stuck city”.

Memphis Light, Gas and Water symbolizes this quagmire.

Since 2016, MLGW has been allowing customers to pay their utility bills at 30 ACE Cash Express locations. For the 27% of Memphians who are poor and live in neighborhoods lacking basic services like banks and supermarkets, that meant convenience for them — and for MLGW.

The problem is that such an opportunity risked turning into exploitation.

In 2014, ACE, a payday lender, was fined $10 million for harassing customers and forcing them into exorbitant debts they couldn’t repay.

► The latest news from Tonyaa:With the death of William Downey, South Memphis has lost a ‘mayor’ and a father

Gale Jones Carson, MLGW’s vice president of external and community affairs, said the utility does not know if any of its customers have taken out loans, which can carry interest rates of 300%. Yet MLGW risks putting vulnerable customers in a position where they might be tempted to borrow money they could not afford to repay.

So after The Commercial Appeal reported on this Faustian arrangement, MLGW announced that it would stop accepting utility payments at ACE sites.

Like it should be.

But one of the main reasons it happened is that poverty keeps MLGW, and the rest of the city, stranded.

MLGW was stuck trying to meet the needs of its customers who don’t have access to banks. For this reason, many customers rely on payday lenders and their services out of habit more than desperation, said Wanda McDonald, financial wellness coach at Operation HOPE, Inc., in Memphis.

Operation HOPE is a national organization that works to help low- and middle-income people gain access to, among other things, credit and bank accounts.

“A lot of people here grew up seeing their parents use payday lenders, or they grew up in environments where they never did business with a bank, or where people didn’t trust banks,” said Mcdonalds.

“They don’t know what they don’t know.”

► Podcasts:Listen to all episodes of ’20 with Tonyaa’

Elena Delavega, associate professor of social work and associate director of the Benjamin L. Hooks Institute for Social Change at the University of Memphis, said while programs like Operation HOPE help, broader changes are needed.

“We need to be able to create large-scale bank accounts for the poor,” said Delavega, who said Memphis has about 214,000 working poor adults. “But the banks are, for the most part, not interested in low-income people.”

Additionally, by no longer accepting payments on ACE sites, MLGW will have to try to find outlets to replace them as paying agents.

And even though MLGW finally won approval last month to raise its rates so it can begin repairing the aging infrastructure that plunges all Memphians, wealthy and poor, into darkness when storms hit, it is forced to weigh cost-cutting measures. , such as layoffs, to compensate for this increase.

It could push more people into poverty.

So the MLGW conundrum exemplifies what Robinson was talking about in 2018. Poverty has stuck Memphis in a place where more than a quarter of the population struggles to access basic services.

It also illustrates what Delavega, who was lead author of the 2018 report, “The Poverty Report: Memphis Since MLK,” said at that same meeting Robinson attended: that the poverty we believe affects some of us, in various ways, are catching up with all of us.

And hold us all back.

Making stories that make our community better takes time and resources. A Commercial Appeal subscription gives you unlimited access to the stories that make a difference in your life and the lives of those around you. You can also tap into news from the 109 local USA TODAY Network sites. You can register here.

Tonyaa Weathersbee can be reached at [email protected], and you can follow her on Twitter @tonyaajw.

Comments are closed.