Fuel dealers demand credit checks

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(Host) Some fuel dealers are turning away customers unless they first agree to a credit check.

And in a few situations, the dealers have refused to sell fuel even if the customers agree to pay in cash.

An anti-poverty agency that serves the Connecticut River Valley says the practice is wrong, and hurts customers already suffering from today’s financial crisis.

VPR’s John Dillon reports:

(Dillon) Merilyn Bourne is executive director of Listen Community Services in Lebanon, New Hampshire. The private non-profit agency helps low income people in the Connecticut Valley area of Vermont and New Hampshire.

Bourne says she was shocked to learn that some fuel dealers were refusing to accept either cash payment or loan-guarantees from customers.

She says she learned of the situation when she was trying to help a working family get their fuel for the winter. The young man’s credit history wasn’t good, so he got his father to co-sign the credit application. But the dealer still refused to sell the product based on the son’s credit, she says.

(Bourne) "And the father said I signed for that reason. I’m guaranteeing the payment. And they said, `We’re not interested in doing business with him.”’

(Dillon) Bourne said she decided to see if the dealer would take cash for a kerosene delivery. When she called the company herself, she said they refused to accept payment unless she submitted to a credit check.

According to Bourne, the credit squeeze and the worsening economy could force more customers to rely on cash

(Bourne) "I would understand why any business owner would not extend credit to a household that was a credit risk, especially now. What I don’t understand is why any business would not accept cash in hand for goods or services. And I still don’t have an answer for that.”

(Dillon) The company that Bourne said refused the cash payment was Cota and Cota, which serves southern Vermont and New Hampshire.

Matt Cota is executive director of the Vermont Fuel Dealers Association. His grandfather founded the company and members of his family are still involved.

Cota says dealers require credit checks because they have to make sure customers are a good credit risk.

But he says companies may choose not to accept cash, because it’s more efficient to put customers on a credit-based delivery schedule.

(Cota) "If someone has cash, there will always be fuel deliveries – depending on how much they need – that will help. The problem exists that many dealers have minimum deliveries…. because minimum deliveries allow dealers to maximize efficiencies.”

(Dillon) Steve Wark directs the office of consumer affairs for the Vermont Department of Public Service. He says it’s not illegal for companies to reject customers, even if they can pay cash. But he says considering the economic times, the dealers ought to be flexible.

(Wark) “Times have changed in just a month. First we’ve seen skyrocketing prices that have hurt Vermonters at a very basic level. Now we’re seeing the follow-up insult of credit markets and people having over-leveraged some of their finances. So now is the time for us to consider changing practices. Nobody is suggesting what happened here saying this illegal, but there’s a better way and we’re going to have to get to that.”

(Dillon) Merilyn Bourne of the community services agency in Lebanon says cash customers will usually be able to find suppliers. But they may have to pay more. She says she wants to make sure that dealers live up to their promise to not let people go cold this winter.

For VPR News, I’m John Dillon in Montpelier.

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