THUNDER BAY -- Repeat business is the hallmark of the trade for payday lenders. Over 93 per cent of loans are committed to customers who have already taken at least one other loan with the company.
Northwood Coun. Shelby Ch'ng sees an education opportunity. According to a Financial Consumer Agency of Canada survey, only 43 per cent of people are aware payday loans are more expensive than credit cards and she believes better education on the subject will change the industry's landscape.
Ch'ng wanted to ask administration to explore education and advertising limits as actions the municipality could take but in her own research, found companies and credit unions are already engaging the issue.
“Small businesses have actually contacted me saying that if they’re a day or so behind paying their employees, they’ll actually have these payday lenders calling their businesses looking for the money," Ch'ng said.
"It has prompted other businesses to actually offer micro-lending to their employees.”
Ch'ng intends to collaborate with the Thunder Bay Chamber of Commerce in a campaign that will encourage local companies to increase awareness among employees. She pointed to Copperfin Credit Union as an example of a regional business that's training trainers to help those who find themselves spiraling into debt.
"They’re actually filling that need and there’s some education around what payday lending actually means to people and how it affects communities," she said.
"My hope is we can curb the market trends and stop the stpread of the overuse of payday lending and I hope to have some good quality alternatives for financial literacy."
Although 20 per cent of the payday loan industry earns over $80,000 per year, nearly three-quarters of those accessing payday loans are working class. Coun. Paul Pugh called the companies "anti-social" as he offered his support.
"This is relevant to poverty reduction because the payday lenders prey on the poor in my opinion," Pugh said.
"It’s not a service for the poor, not in my view. I think these are parasites and it’s a good thing if we can regulate this industry and try to, if not end it, at least regulate it so there can be alternatives."
Pugh echoed Ch'ng in observing local credit unions are providing those alternatives.
"The credit union is doing very good work in trying to assist people with this and I think with the participation of the municipality and other orders of government, hopefully we can see an end to this particular phenomenon."
Administration has committed to looking into what role the muncipality can play in an education campaign and limiting signage by the end of June 2017.
