Payday Loan Scam Still Going Strong In Ontario. Louis Shalako.

Louis Shalako

Simple charity will never be the solution to poverty. The problem is simply too great, too pervasive.

There are too many reasons. There is no one, single cause of poverty in this province and this country.

The subject is so complex, it is best to tackle the reasons one at a time.

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The payday loan scam is still going strong here in Ontario, presumably in the rest of Canada as well.

This is the one, where people who are already well below the poverty line, whether working full or part-time, on the Ontario Disability Support Program or the so-called Ontario Works benefit, (welfare), the elderly, the mentally-ill, and yes, the addicts and the alcoholics, line up to borrow a hundred bucks, perhaps a couple of hundred, in order to make it through the month.

Sometimes it’s some small, unexpected emergency, a car repair or the kids need clothes for school. There are certainly legitimate reasons for a small, short-term loan in the family household.

Whatever. Ultimately, the scammers are taking the taxpayer’s money out of the mouths of the hungry.

My neighbour went to a so-called ‘cash-store’ last month. She says she went twice. She borrowed a total of $220.00, and at the end of the month, when she got her ODSP benefit, she repaid a total of $273.00.

The total term of the loans were less than two weeks. That is fifty-three dollars and some small change on a loan of a couple of hundred bucks, for less than two weeks. These interest rates are usurious, and the worst part, is, she’s starting off the next month, almost three hundred dollars down—in a hole, and her total benefit is the provincial disability benefit of $1,151.00 per month. She doesn't actually get all of that, due to some help from CMHA.

She’s on disability. The Canadian Mental Health Association kicks in on the rent, I don’t know how much because she doesn’t either. She’s out on a Community Treatment Order. Her social worker shows up every day to make sure she takes her medications, otherwise its back to hospital for her—maybe even permanently, although her illness seems to respond well to continuing treatment.

She’s back there every month, (I mean the cash store), and this has been going on for years. 

Basically, they’re like pimps, living off the avails of someone else’s disability pension. Sure, its nickel-and-dime shit, but they got a lot of them.

I told her, that if she could just stay away from there for as little as two months, she would have beaten them.

(This coming from a guy who maxes out the credit card every winter when things are slow, and never quite gets it paid off in summer, when things are a bit busier. The yearly rate on the credit card is 28 %, which seems more than high enough. Yet compared to the so-called payday loan operations, it seems almost benign. But it isn't, not really.)

This business is so lucrative, that the money stores have sprung up like mushrooms after a summer rain.

There must be twenty of them in this town, and that is in a city (Sarnia) of only 72,000.

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I know a couple of guys, they got sucked into transferring their credit card balances to a service provider offering a much lower interest rate. It was an introductory rate—less than half of what they were paying.

It worked so well, that they ended up transferring their balances around about every six months…and they signed up for a handful of new credit cards as well. After all, it was so much easier to make the payments, and they were both working. 

Naturally, sooner or later, they ran into trouble. A layoff, a slowdown in the work, illness, a bad break. They were always maxed out and therein lies the problem.

Ultimately it turned into a bad debt for all parties. Their credit was destroyed, and the debt was ultimately uncollectable. When all this occurred, they were so enthusiastic, they sucked a few others in as well. Oh, yes, they told me all about it. The thing practically sold itself. 

Anyone that could get credit, that is, and there are a few who can’t, and never will.

It was good for nobody, in the end—not everyone ends up like that, of course. Some people smarten up and learn the credit game in the end. Maybe they just didn’t have so many bad habits. Maybe they’re just lucky. Maybe they’re continuously employed somewhere…in which case they can make the payments.

Once you scratch the surface of the problem, it quickly becomes clear that the solution to poverty requires a plan, one that takes into account all aspects of the problem. A plan that attacks from all directions at once, a plan that involves all levels of government, federal, provincial, regional, county and municipal. It will require the cooperation of certain institutions, banks, business, commerce, industry, and private NGOs.

It has to involve the individual as well.

This plan will require some very well thought-out tools and an enlightened, long-term policy that all can commit to.

END

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