Hamilton looks to crack down on payday loan industry
Hamilton councillors unanimously approved a motion seeking from the province the ability to limit the locations of payday loan and cheque cashing outlets, while also strengthening the Payday Loans Act.
“This is predatory economic violence,” said Ward 3 councillor Matthew Green, who introduced the motion at council’s Sept. 9 meeting. “(They) are targeting our most vulnerable, indebted people. It’s legalized loan sharking.”
Green’s motion targeting the industry, which was revealed earlier this summer, includes forcing these businesses to post their rates on their walls, provide information about debt counselling, and having Hamilton staff identify all the payday loan businesses in the city.
Also contained in the motion was a request to the province to toughen the Payday Loans Act.
The act regulates the industry allowing outlets to charge $21 for every $100 people borrow. Green says desperate people use these businesses, and they end up having to go to another payday loans outlet to pay the loan of the first one.
Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, says municipalities need the power to regulate a business that is taking advantage of vulnerable people.
“We deem the industry as predatory in nature because its practices and slick marketing campaigns lure vulnerable consumers into transactions where there is nowhere else to turn in a financial crisis,” said Cooper.
Based on the payday industry’s own information, for every new customer loan, 15 are repeats, said Cooper.
Stan Keyes, president of the Canadian Payday Loan Association, headquartered in Hamilton, stated in an email letter sent to councillors Sept. 8 that “council should not pass bylaws to ban industries providing services that consumers demand.”
He said the province does enforce the existing regulations, including levying fines, and revoking licenses “which they have done with non-compliant lenders.”
Keyes, a former Liberal MP, stated the industry is already heavily regulated since 2009. In 2012 there were 42 outlets in Hamilton, now there are 34. (Source: Hamilton Spectator)