Payday lenders under microscope
Community groups fight high loan fees
- PUBLICATION: Canstar Community News Limited
- DATE: Thursday, November 22, 2007
- BYLINE: Sam Thompson
Deborah Yackabowski knows what it's like to be hit with unexpected fees from a payday loan company.
Yackabowski, a resident of the North End who says she's used payday loans numerous times, is working with community and consumer groups to help put a cap on loan fees.
During the next few weeks, the Public Utility Board will be holding public hearings to determine the maximum allowable charges and fees for payday loans.
Yackabowski plans to be there front and centre. She's not, however, on a witch hunt to shut down the loan businesses.
"I'm glad they exist," she said. "Otherwise, I wouldn't be able to take out a loan. Obviously, the money just comes from your next paycheque, so the problem is you end up borrowing to afford to borrow more each time."
An August "secret shopper" study revealed that fees on a 12-day loan ranged from $44 to up to $109 - often with confusing price structures.
Yackabowski says she's attending the hearings because she wants to see set fees. She expects to continue using payday loans, and she wants to be sure what she's getting into.
"If I have to get a loan, if it's $300, I want to know for sure that I'm paying back, say, $380...not all these extra fees," she said.
"There is disclosure (of additional fees), but most of the time when I'm borrowing money, it's for something important enough that I want right then...do I need to go through the documents with a fine-toothed comb?"
Yackabowski says she can't go to a bank because she has bad credit. As she usually goes to payday lenders when she needs money in an emergency, even if she could get a bank loan, waiting a few weeks for approval would defeat the purpose.
This means, however, she's stuck in a cycle of payday loans.
"Once you're in, you're in," she said.
"It's hard to get out of it."
Gloria Desorcy, executive director of the Consumer Association of Canada's Manitoba branch, said she's pleased to see the Province is tackling the payday loan issue, but is waiting until the hearings are complete before declaring a victory for the consumer.
"The proof is in the pudding," she said. "We have to wait until we see it. We're just trying to get the consumer on an easier footing."
Lori Hunter of the Manitoba Society of Seniors (MSOS) said she's involved in the hearings with the goal of providing not only a fair rate but a clear disclosure of information to consumers.
MSOS is working with CAC and Winnipeg Harvest - for whom Yackabowski is a volunteer - to represent payday loan users.
Hunter said a lack of information, as well as shame over having to resort to payday loans, means some people will get involved without doing the necessary research on fees or additional rates.
"In our organization, seniors are 50-plus, which means we have a lot of people still in the workforce, but it's primarily people on a fixed income," she said.
"There's the human factor - people are embarrassed. These are not choices a person would make if they could go to a bank....I've had seniors call me and tell me they're in debt (from payday loans) and need help."
The Public Utility Board's proceedings, which included hearings in Thompson and Brandon earlier this month, run until Nov. 28, with closing arguments Dec. 3.