Better Business Bureau: 90-plus Mo. nursing homes offer payday loans

ST. LOUIS -- More than 90 Missouri nursing homes make payday loans to their own employees at high interest rates, then deduct payment of the loan, interest and fees from the workers' next paychecks, officials with the Better Business Bureau said Tuesday.

The arrangement is legal, but the BBB questioned the ethics of employers making money off the wages of their workers. The BBB, which looked at nursing homes as part of a larger study on payday loans released Tuesday, said the lenders do not loan money to nursing home residents.

According to the Missouri Department of Health and Senior Services, the state has 971 licensed nursing homes.

A spokeswoman for the Community Financial Services Association, a national trade association for the payday loan industry, said she was unaware of any other states with a similar arrangement between nursing homes and payday loan operators.

Missouri allows payday loan lenders to charge an annual percentage rate, or APR, of up to 1,950 percent on two-week payday loans. A spot check by the BBB found that one nursing home charged an APR of 912.5 percent, another charged 365 percent and a third charged 304 percent.

Unlike other payday loans, the lender is able to deduct the loan, interest and fees straight from the paychecks of nursing home workers, the BBB said.

"Desperate, unknowing people can get caught up in a downward financial spiral, and end up in a worse condition," said Michelle Corey, president and CEO of the BBB office in St. Louis.

The nursing homes' holding payday loan licenses are tied to three groups. Calls seeking comment from principals for those three groups were not returned.

Missouri Department of Health and Senior Services spokesman Kit Wagar said the state can't prohibit owners of nursing homes from also owning a payday loan business and having employees as clients.

State inspectors learned of payday loan operations at nursing homes in 2006, and the health department moved to bar those operations from being onsite at the nursing homes. Instead, employees can take out loans online using computer terminals at the nursing homes.

The Better Business Bureau said two allied groups of 62 nursing homes hold payday loan licenses. Principals in the two groups are James and Judy Lincoln of Sikeston; Mathias Dasal of Eldon; Gary Crane of Rogers, Ark.; and Timothy Drake of Pascagoula, Miss.

The lone director of the third group, with 30 nursing homes, is Don Bedell of Sikeston. The BBB said Bedell is also the sole director of a payday loan company that has licenses at those nursing homes.