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Internet Use and Accessibility for Low-Income Canadians
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ACORN Canada's comments on risks and consumer protection policy recommendations
Telecom Notice of Consultation CRTC 2015-134
Review of basic telecommunications services
14 July 2015
ACORN Canada engaged me to determine an appropriate fee structure for payday lenders that would reduce the current very high rates while still allowing at least some of the companies to continue to operate. This fee structure should replace the current rule of 60% maximum interest contained in the Criminal Code, thus allowing mainstream financial institutions to compete in the short-term lending field legally.
The payday lending industry is unique in Canada. In most of the country, this billion- dollar business is completely unregulated. And it makes money by openly breaking the law against criminal interest rates. While the Criminal Code clearly states that annual effective interest rates must not exceed 60%, payday lenders typically charge between 300% - 900% and, not infrequently, more than 1,000%. And yet, in spite of this flagrant violation of the law and the harm done to those who regularly borrow from Money Mart and its less well-known competitors,
virtually nothing is being done to crack down on this rapidly growing industry. It’s estimated that there are more than 1,200 payday lending “stores” across Canada. Some have more reprehensible lending and collection practices than others. But all of them share the same core business practice of breaking the law every single day.
The practice of offering short-term payday loans against an individual’s paycheque (and/or other regular source of income such as pension cheques) has grown dramatically in the past few years and the industry is now estimated to be worth $2 billion a year in Canada in terms of loan volume. By comparison, a recent report about the industry in the United States, where payday lending originated, stated that the industry is worth US$44 billion annually in that country. ACORN and other organizations have raised concerns about the phenomenon of payday lending, citing extremely high rates of interest and lack of consumer awareness about the dangers of extended use of payday loans. The industry remains unregulated, and ACORN has called for legislative action to be taken.
Fair banking NOW!
In this report, the Public Interest Advocacy Centre sought to develop a framework for defining “affordability” of communications services in the digital age. Citizens need to be able to participate fully in society—and they need communication in order to do so. However, as communications services become increasingly central to the everyday activities of Canadians, are they affordable for lowincome Canadians, or do these consumers struggle to retain service? This report examines the way affordability is perceived by regulators, academic researchers, and corporate stakeholders, both in Canada and in other jurisdictions.