Should Hamilton make payday loan places get a licence?
One councillor calls payday loan and cheque cashing businesses 'economic violence'
The city should be licensing payday loans stores in Hamilton to prevent them from preying on Hamilton's most vulnerable residents, says a local politician who says he's making it his mission to fight "economic violence."
Matthew Green, who represents Ward 3 in central Hamilton, will call on fellow councillors to look at licensing payday loan businesses.
This is our city's shame in terms of what we're allowing these companies to do.- Ward 3 councillor Matthew Green
Hamilton is "ground zero" in the payday loan debate, Green said. He wants the city to look at forcing the businesses to post their rates, showing comparative and annualized rates and mapping the locations of payday loan places in Hamilton.
"My campaign office was across the street from one of these things, and I would see people regularly line up outside before they even opened," he said. He noticed that with their high interest rates, payday loan businesses generated "repeat customers."
"This is an embarrassment. This is our city's shame in terms of what we're allowing these companies to do."
It's the responsibility of elected officials, he said, to "limit the harm caused by what I can only call economic violence."
Regulate locations
Green will bring a notice of motion to a future council committee meeting asking the mayor to write to the province. He wants the Payday Loans Act strengthened, and for Hamilton to be able to regulate the locations of payday loan and cheque cashing outlets.
He also wants a report on how to license the businesses, and force them to post their rates. He wants the city to map the businesses and provide "alternative accessible financial services" for residents.
Green's motion is timely. On Monday, the province met with Hamilton officials to talk about tighter industry regulations. The consultation came after the province learned about Money Mart's holiday program where it bought back gift cards for 50 cents on the dollar, said Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction.
"If you do a simple search on Google maps for pay day loans, you can see where they're located — in low-income neighbourhoods," Cooper said.
A recent map from the Ministry of Government and Consumer Services seems to back up Cooper's claim. The largest number of documented payday loan places are in the lower city, particularly in areas where the average household income is less than $30,000.
Payday loan and cheque cashing businesses are regulated by the provincial payday loans act. Under the act, such places can charge consumers as much as $21 for every $100 they borrow. If you borrow $300 for two weeks, it will cost $63.
Such interest rates, Green and Cooper say, put people with low incomes into mounting debt that becomes impossible to escape.
Payday loan places are "a thorny subject," said Keanin Loomis, president of the Hamilton Chamber of Commerce. So is the idea of licensing them.
"They operate within the law," he said. "That's the thing. Whatever the law is, there's going to be business and private enterprise that fills the gaps, and that's certainly what they say they do."
As for licensing them, Loomis says putting greater restrictions on one type of business over the other is "a slippery slope."
CBC Hamilton is pursuing comment from the Canadian Payday Loan Association. In 2013, president Stan Keyes said that payday loans help people in a crunch. Before payday loans, he said, they had few options.
"Perhaps they had to take their TV to the pawnshop," he said. "Or borrow from family or friends. Or go to the pool hall and get money from someone who gives them a contract that involves physical harm."
Number of payday loan outlets, by city
- Hamilton: 34
- Toronto: 225
- Mississauga: 54
- Brantford: 10
- Guelph: 10
- Kitchener-Waterloo: 18
- Ontario: 791