This isn’t how the same kind of issue plays out in B.C.
As this column documented time and again a few years ago, payday and chattel loan companies in this province were routinely flouting the Criminal Code and charging far more than the maximum allowable interest rate. But no B.C. government — not the Socreds, nor the NDP, nor the Liberals — prosecuted such companies, not even when their names and details of several egregious cases were published in The Vancouver Sun.
And when our government finally “took action” five years ago this month, it was to sweep the mess even further under the carpet.
While New York takes steps to redress past wrongs and prevent future ones, B.C. has ignored past wrongs. And it only pretended to prevent future ones in one segment of the high-cost loan industry — payday loan shops — by raising the bar for what is legally considered a usurious rate. Whereas payday lenders used to be in technical violation if they charged more than 60 per cent a year — though this didn’t mean anything, because nobody prosecuted them no matter how many multiples of the legal limit they charged — the law now lets them charge almost 600 per cent a year to customers who take a series of back-to-back short-term loans.
Meanwhile, New York lenders can expect to find themselves in court if they charge more than a tiny fraction of that. Their limits are 16 per cent a year for unregistered companies, 25 per cent a year for registered ones. And when companies try to skirt the law by setting up shop outside the state and lending money at excessive rates over the Internet, the state goes after the affiliated companies that try to repossess from those who fall behind in their payments.
In other words, strict definitions of usury can be enforced. And the lame arguments we hear so often here — that the police are too busy to investigate, that it’s too hard to convict, that cracking down on payday or chattel loan shops would open the door to “real” loan sharks — don’t hold water.
Bruce Cran, the plain-spoken head of the Consumers’ Association of Canada, says he thinks protection against rates that other jurisdictions — even the Criminal Code — consider to be in loan-shark territory is weaker now than five years ago when he was campaigning against B.C.’s legislative seal of approval for ultra-high-cost loans.
Which is odd, because you’d think the payday loan legislation that legalized what used to be usury would free up investigative capacity to focus on other high-cost lenders not covered by the new law — pawn brokers who charge more than the allowable interest rate, or chattel loans shops that take cars for security.
But when I asked — repeatedly, and far in advance of my deadline — both the ministry and Consumer Protection B.C. how many investigations they’ve launched, what charges they’ve laid and what convictions they’ve won since 2009, I got a runaround non-answer from the former and no response at all from the latter. Which is par for the course, according to Cran, who tells me he has pretty well given up hope that B.C. authorities will do anything effective on this issue.
Don Cayo: B.C. authorities make no move to rein in usurious lenders (with video) (external - login to view)