Maple Ridge passes bylaw to ban payday loan businesses

Maple Ridge passed a bylaw last week to ban any more payday loan and cheque cashing businesses from opening shop in the city.

The idea to ban the businesses came during councillor Tyler Shymkiw's run for election last fall, and the bylaw passed with unanimous support from the mayor and council.

"Payday loans are a significant contributor to the cycle of poverty in our community, with devastating effects on our working poor. We as a community have decided to stand up and say no to these businesses," said Shymkiw in a written statement.

Payday lenders offer cash advances to customers, but charge stiff fees for their services — up to 23 per cent of the principal, according to B.C. law. If the customer fails to repay all or part of the loan, a lender can then charge 30 per cent per year on the outstanding amount.

At Money Mart, a $300 loan for 14 days at an interest rate of 23 per cent of the principal would cost $69. The annual interest rate on that loan works out to 599.64 per cent.

Section 347 of the Criminal Code of Canada outlaws interest rates above 60 per cent per year, but it does not apply to payday loans under $1,500 with a term of agreement that is 62 days or less.

Shymkiw said he decided to take on payday lenders after working for his local food bank and seeing people using their services trapped "in a situation they can't escape from" and unable to repay their loans.

"It was very clear from working with clients there that payday loan companies were predators, exploiting our most marginalized citizens," he said.