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Tucson Urban League
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PHOENIX — Arizona's major utility companies have ended a longtime practice of allowing customers to drop off electric and gas payments at payday-loan centers.

Southwest Gas, Tucson Electric Power and Arizona Public Service Co. began the practice as a convenience to customers but learned of some potential problems last month.

The change has met with approval from Arizona Corporation Commission members, the Arizona chapter of the AARP and the Arizona Community Action Association, which advocates for low-income residents.

Payday-loan centers offer easy-to-obtain, short-term loans to borrowers who promise to repay them plus a fee after the next payday.

The centers, which frequently also cash people's checks, have come under fire for their rates, which some critics say are as much as 400 percent annually.

For years, most of the state's major utilities arranged for customers paying cash to drop off their payments at payday-loan centers as well as grocery and convenience stores.

Both Tucson Electric Power and Southwest Gas used payday centers as main drop-off sites.

The National Consumer Law Center found more than 36 utilities used payday lenders as authorized bill-payment agents.

Utilities may not have understood what it meant to direct people who pay cash because of tight budgets into places that offer such easy-to-get loans, said Cynthia Zwick, executive director of the Arizona Community Action Association.

A week after AARP alerted the Corporation Commission to the situation, Southwest Gas told Zwick's group that it would end its nine-year-old practice, and APS and TEP quickly followed.