For many years, Burnaby resident Steven McMurtrie found himself in a vicious financial cycle he had trouble escaping.
He owed money to payday loan sites in Burnaby after the first time he took a short-term loan in 2006. McMurtrie has been living on income assistance since 1999, where he receives $906 a month, but $744 of it went to his rent each month. He was in a position where he needed more money to pay all of his bills.
"When I paid the $300 on pay day, I was $300 short so I had to get another payday loan to pay that off," McMurtrie said. "It's what happens to a lot of people. It's a cycle that people, especially those with lower incomes, can't get out of. Through the years, I found it hard to get out of this cycle."
McMurtrie is also a member of Acorn’s Burnaby chapter, a local social justice group tackling issues low-income people face.
At Monday night’s council meeting, McMurtrie was joined by Monica McGovern, the Burnaby Acorn chapter chair, to talk about payday loan sites. The two were there to ask council to limit payday loaning businesses operating in the city.
"The problem is these companies continue to target the low-income neighbourhoods in Burnaby," McGovern said. "An ideal outcome would be if the city council would consider a moratorium on issuing more licenses to these ... companies. Typically in B.C. They charge 600 per cent annual interest on their loans.
McMurtrie said there are five payday lending stores on Kingsway between Metrowtown and Edmonds alone.
Since November 2009, the payday loans regulation has been in effect, and all payday loan businesses must be licensed with Consumer Protection B.C.
In 2013, British Columbians borrowed about $351,000,000 through payday loans, about 800,000 loans were taken out, and each loan was around $450 or less, according to Consumer Protection B.C. Payday lenders are prohibited from charging more than 23 per cent interest a month.
This past January, CBC reported that The Cash Store was ordered by Consumer Protection B.C. to repay more than $1 million to B.C. consumers who were charged hefty interest rates on their payday loans. Cash Store Financial Group was found over-charging customers.
Although most Burnaby councillors said they supported Acorn's request, there is not much the city can do.
"We can do something," said Coun. Nick Volkow. "We can't, as a city, regulate the interest rates or anything else, but as Ms. McGovern says we can try to not allow them to conduct this kind of usurious business in our community."
Volkow likened payday loan businesses to legalized loan sharking.
"It would be my preference not to have any of these folks in our town. It would be my preference not to have this business operating anywhere in the country because basically it's loan sharking, legalized loan sharking is what it is," he said.
Coun. Dan Johnston said it's an issue the city needs to address, but it's a provincial and federal government issue too.
"I remember when the federal government changed the bank act 15, maybe 20, years ago and reduced the bank's ability to make short-term loans," he said.
Coun. Colleen Jordan said they can look into how many there are in Burnaby, and proceed with a resolution that would get sent to other organizations, such as the Union of B.C. Municipalities.
"It's pretty clear that something needs to be done on different levels of government," she said. "Maybe we can't do all that much ourselves, but I'm sure willing to look into it."
Mayor Derek Corrigan said the city might be able to restrict locations, but not much else.
"It is something that we only have very blunt instruments (for)," he said. "We can try through our ... zoning power to restrict the number of these kind of businesses that there are, but we're not permitted to prohibit a business that's legal in B.C."
Council referred the issue to the community development committee, which could lead to a staff report with recommendations on how the city can proceed.
For more information, visit www.paydayloanrightsbc.ca, or www.consumerprotectionbc.ca.
What are your lawful rights?
- Consumers must receive a copy of the loan agreement at the time of signing it, which must include all of the charges, terms and conditions of the loan.
- Consumers have the right to change their mind and cancel the loan by the end of the following day, without paying charges.
- A consumer can't be charged extra for paying before the due date, and the loan can be paid any time before the due date.
- A person can't be issued more than one loan at the same time or have a loan rolled over.
-A consumer can't be given a loan that exceeds more than 50 per cent of their paycheque or net income during the loan's term.
