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Author Topic: Piatkowski: Buddy can you spare a payday loan?
Michelle
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posted 11 April 2005 03:06 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post
quote:
Can't pay your hydro or gas bill? Been hit by an unexpectedly large car repair bill? Need to buy some groceries, but can't wait until payday? Don't worry, there are plenty of people who are willing to help you. All too often, however, the “help” will involve exorbitant interest rates, massive and often hidden service charges, and dubious insurance premiums which combine to make the cost of short term borrowing by lower income people absolutely outrageous.

Scott Piatkowski


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Michelle
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posted 11 April 2005 03:14 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post
P.S. Awesome column, Scott. Since moving to my neighbourhood not even two years ago, I've seen two payday loan places pop up near me. I seethe every time I walk past them.

On the short walk between the subway and my place, I pass three or four pawnshops and payday loan services. (And no, I don't live near the pawnshop area of Church Street.)

I've never used one of those places because I know how usurous they are, but not everyone who goes there out of desperation knows that. Or, sometimes people are so desperate that they do it even though they DO know.

Infuriating.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
lagatta
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posted 11 April 2005 03:32 AM      Profile for lagatta     Send New Private Message      Edit/Delete Post
Oh, I think a lot of the cheque-cashing and payday loan place users know they are dealing with sharks.

It wasn't the purpose of Scott's article, but what alternative do those people have? They can't get a loan from a bank or credit union - it is not so easy to open up an account nowadays. They don't all have friends who can tide them over. There is no question but that those payday places are usurers, but if they are shut down, poor people will have to rely on underground usurers who threaten bodily mayhem, unless a solution can be found.

[ 11 April 2005: Message edited by: lagatta ]


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Michelle
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posted 11 April 2005 03:47 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post
I agree with you completely, lagatta.

Just curious - where do credit unions fit into all this? Don't community credit unions allow people with low incomes to open accounts?

However, most of the people I have known who have used payday loan places are people who have bank accounts already, but are either in overdraft and can't afford to let their paycheque be deposited into the account (e.g. to bring the balance to zero), or they just really need the money before payday so they write a cheque for the amount and the fee.

I think the major underlying problem is that people on welfare and minimum wage just don't have enough money to live. When I was living on minimum wage, I had a budget with absolutely NO room for emergencies. Every dollar was accounted for. If an emergency came up, I had to go to my mom or dad for help, which I hated doing.

But not everyone has a mom or dad who can bail them out if they suddenly have to buy $50 antibiotics, or their boots give out in the middle of winter, or whatever.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
skdadl
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posted 11 April 2005 04:00 AM      Profile for skdadl     Send New Private Message      Edit/Delete Post
Great column, Scott. I must pay more attention as I walk down my streets -- I haven't been noticing these places (although that doesn't mean much).

And I agree, Michelle: the more basic problem is how little many people earn, especially people on welfare or disability pensions. We have to keep hammering away on that score too.


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Fidel
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posted 11 April 2005 04:43 AM      Profile for Fidel     Send New Private Message      Edit/Delete Post
I'm guessing that pawn shops eventually end up owning the bulk of a poor neighborhoods family heirlooms, priceless to the families themselves.

And payday loans, Jeezwhiz$#@!~, fcs!. High interest is the price the needy pay for being poor, and it's not right at all. This is the financial mechanism whereby vast wealth is transferred from the poor to the very rich. Usurous interest rates and rent were described as evil by Muhammed. No wonder capitalism is at war with Islam, the two religions are fundamentally opposed to the rotten core.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Américain Égalitaire
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posted 11 April 2005 05:24 AM      Profile for Américain Égalitaire   Author's Homepage     Send New Private Message      Edit/Delete Post
These places started becoming insanely popular here about 10 years ago. To me, they are nothing but buzzards, preying on people. Yes, there are people who deal with them that have some kind of idea of what they are getting into - but they hope against hope that they can beat the clock and the odds. This is predatory capitalism at its finest - preying off the desperation and lack of sophistication of people.

Here in the states, there have been many moves made by progressive politicians to reign in these payday loan companies - but they have very strong lobbies and make the same arguments I've heard -- "hey, we're really helping out the little guy - we're the lender of last resort."

Yeah, right. Tell me what people did prior to the payday loan scammers? And how are things better now. Sure the loan shark might break your legs. But the payday loan scammers would take everything else you have - home, car, whatever - the law is on their side - always. Once someone gets caught its almost impossible to extricate themselves from the downward spiral. AND to top it off, the industry just got the new bankruptcy law passed here that seals the fates of people caught in the payday loan scam net.

In fact, I could see those drowning in payday loans going to loan sharks in desperation. And desperation is what its all about.

I would think Canada would quickly quash this American import or at least regulate the hell out of it.


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Michelle
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posted 11 April 2005 05:27 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post
Yeah, you would think, wouldn't you?
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
DrConway
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posted 11 April 2005 05:49 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
And the real problem is the continuing squeeze on wages in Canada. With wages not going up as fast as they used to and everything costing more (thanks, deregulation - not! ), there's no doubt as to why these parasites are coming out of the woodwork.

Payday loan places also used to have (relatively) easy qualification processes. You only had to be working for three months and you could get up to $200, straight up.

... but you had to repay $230, within two weeks.

It seems so simple and convenient, but you get stuck when you suddenly can't repay it and need to roll it over.


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Mr. Magoo
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posted 11 April 2005 06:15 AM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post
It would be nice if there were some solid stats on this. It's nice to believe that everyone who uses these places is a hard-working blue collar type who suddenly needs a new radiator in his car or he won't be able to make it to work, but honestly, I don't know. There are quite a few of these places on the Yonge strip near where I work, and when I walk by them it seems like everyone in there is young, fairly well dressed, yapping on their cellphone, etc.

If you're behind the 8-ball for a while because your car conked out, or because someone stole your winter coat that's one thing.

If you're a little tapped because you went way over your cellphone minutes talking to your girlfriend, well, that's another. That doesn't mean that the business shouldn't be regulated, or that the law shouldn't be enforced with regard to interest rates. It just means I don't really feel all that bad for you.


From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002  |  IP: Logged
Américain Égalitaire
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posted 11 April 2005 06:41 AM      Profile for Américain Égalitaire   Author's Homepage     Send New Private Message      Edit/Delete Post
Magoo:

you're right - most of what we know about these operations are based on anecdotal stories by alternative journalists and occasionally a consumer watchdog group. The government doesn't touch this with a 10-foot pole here because the lobbying orgs for the paydayers spread lots of campaign cash around and they have good lawyers.

There does seem to be more than one audience for this kind of loan and I think you saw one of them. The other audience IS in the poorer neighborhoods and I have seen them. I don't know whether you have the ads for these places in Canada like we do, but the ads here absolutely play to a lower socioeconomic graphic (country music or rap style ads, prominent displays of minority people in what I would call stereotyped fashion and radio ads that say "there's no need for embarassment") etc. They know who the audience is.

While I don't have much sympathy for the cell phone diletanttes its the people in the neighborhoods I've seen that often turn to the paydayers out of desperation or lack of fiscal sophistication. Some of the exposes on paydayers have concentrated on the fine print in the agreements that are signed by people - often they don't understand the legalese they are signing.

IF we taught economic survival 101 in schools it would go a long way toward helping people avoid these traps. I was lucky to have a consumer class in my school, but most don't teach those "survival skills" i.e. what your loan document means.


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lagatta
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posted 11 April 2005 06:54 AM      Profile for lagatta     Send New Private Message      Edit/Delete Post
In my neighbourhood, the clientele of these operations is primarily poor immigrant workers. I know a Kurdish fellow who works at the Jean-Talon market for minimum wage and has a wife (who speaks no French or English and comes from a very traditional village society) and four kids. Now the older of the kids are working but when they arrived they were in dire poverty. We see a lot of that around here.
From: Se non ora, quando? | Registered: Apr 2002  |  IP: Logged
Bacchus
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posted 11 April 2005 07:24 AM      Profile for Bacchus     Send New Private Message      Edit/Delete Post
Its all part of the allure that big business and finance places spread. Evewn the cell phone yuppies I have some sympathy for because of the culture of consumption they are raised in.

When I was in York U. I got my first credit card with a limit if $300. When I cut that card up a few years ago it had a limit os 12,000$. Never once did I ask for a increase, they just kept jacking up the limit everytime I reached it until I got off the hamster wheel of credit.


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Mr. Magoo
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posted 11 April 2005 07:55 AM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post
quote:
Evewn the cell phone yuppies I have some sympathy for because of the culture of consumption they are raised in.

We're all in that culture. How is it that some of us can live without being in constant, 24/7 communication with everyone we know, and some of us can't? Am I to believe that you and I are special, or that others have been somehow "picked" (as in 'there but for the grace of God go I")?

quote:
Never once did I ask for a increase, they just kept jacking up the limit everytime I reached it until I got off the hamster wheel of credit.

When they increased it, did you treat it like "free money" and promptly spend it?


From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002  |  IP: Logged
Bacchus
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posted 11 April 2005 08:13 AM      Profile for Bacchus     Send New Private Message      Edit/Delete Post
*grins* I said 'some' sympathy not total sympathy. I feel some sympathy for the entitlement queens that think mommy/daddy will pay for everything and will find out the hard way after mommy/daddys funeral and their visa isnt paid. I also will feel satisfaction too *smiles* Im human.

And yes I treated it as free money. Took me time to realize it wasnt and work my ass off to pay it off, but I did and never will I fall into that trap again. Ive been fairly good about it for the past 10 years or so


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Privateer
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posted 11 April 2005 08:34 AM      Profile for Privateer     Send New Private Message      Edit/Delete Post
I think its a bit generational. The stigma of debt isn't what it used to be, so younger people get into it quicker. Susie Orman, if any of you have seen her shows, is now specifically concentrating on young adults in financial trouble.

Speaking of cell phones, people are talking on those hand-free ones are freaking me out. I keep thinking its somebody whose gone insane and is talking to an imaginary entity.


From: Haligonia | Registered: Dec 2002  |  IP: Logged
Scott Piatkowski
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posted 11 April 2005 09:11 AM      Profile for Scott Piatkowski   Author's Homepage     Send New Private Message      Edit/Delete Post
So, who else has noticed the Google Ad for this thread?

Thanks for all of the positive feedback and additional points.


From: Kitchener-Waterloo | Registered: Sep 2001  |  IP: Logged
Scott Piatkowski
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posted 13 April 2005 10:15 AM      Profile for Scott Piatkowski   Author's Homepage     Send New Private Message      Edit/Delete Post
Tomorrow morning (Thursday, April 14) I will be interviewed by the CHML Morning Show on this subject. The interview will start at 8:10 and will last approximately 5 to 6 minutes.

If you're not in the Hamilton area, you can listen live here.

[ 13 April 2005: Message edited by: Scott Piatkowski ]


From: Kitchener-Waterloo | Registered: Sep 2001  |  IP: Logged
Bookish Agrarian
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posted 13 April 2005 10:37 AM      Profile for Bookish Agrarian   Author's Homepage     Send New Private Message      Edit/Delete Post
bookmarked
From: Home of this year's IPM | Registered: Nov 2004  |  IP: Logged
Bacchus
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posted 13 April 2005 11:56 AM      Profile for Bacchus     Send New Private Message      Edit/Delete Post
Do we get to phone in and heckle?
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Scott Piatkowski
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posted 13 April 2005 11:59 AM      Profile for Scott Piatkowski   Author's Homepage     Send New Private Message      Edit/Delete Post
Sorry, it's just an interview (no phone-in). But, feel free to heckle at home.
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Bacchus
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posted 13 April 2005 12:55 PM      Profile for Bacchus     Send New Private Message      Edit/Delete Post
Hmm well if you go to the rabble party, can I heckle you there? And buy you a beer?
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thwap
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posted 13 April 2005 01:10 PM      Profile for thwap        Edit/Delete Post
So, who is being scammed, and by how much?

quote:
Canada’s payday lending industry is estimated to generate more than $1 billion in annual
revenue. This is only an estimate because there is no hard data on any aspect of the industry.
No one really knows how many payday lenders there are. No one knows what the real cost
structure of providing small loans is in Canada. And no one knows how many lives have been
devastated by payday lenders and the debt traps they create.

Here's a pdf file report on the subject.


From: Hamilton | Registered: Feb 2004  |  IP: Logged
Rufus Polson
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posted 13 April 2005 02:00 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
quote:
Originally posted by Privateer:

Speaking of cell phones, people are talking on those hand-free ones are freaking me out. I keep thinking its somebody whose gone insane and is talking to an imaginary entity.

Bit of an opportunity for the people who really do hear voices. All they have to do is carry an old cell phone, and when they start talking to nothing, nobody will think twice about it.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
Boom Boom
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posted 13 April 2005 09:34 PM      Profile for Boom Boom     Send New Private Message      Edit/Delete Post
Unbelievable! On the same page as Scott's column, there's TWO gooooogle ads for 'Payday Loans Canada' !!! Is that bad taste, or what???
From: Make the rich pay! | Registered: Dec 2004  |  IP: Logged
Fidel
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posted 14 April 2005 06:48 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post
People with cell phones standing in payday loan offices ?. The nerve. What's this world coming to?.
From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Amy
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posted 14 April 2005 10:08 PM      Profile for Amy   Author's Homepage     Send New Private Message      Edit/Delete Post
Well excuse me Fidel, but sometimes people can go from relatively stable finance-wise to relatively screwed in the matter of weeks, so "the nerve" right back at you.
From: the whole town erupts and/ bursts into flame | Registered: Feb 2002  |  IP: Logged
Scott Piatkowski
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posted 22 January 2006 12:20 AM      Profile for Scott Piatkowski   Author's Homepage     Send New Private Message      Edit/Delete Post
I think there were other (perhaps newer) threads on this issue, but I couldn't find them.

If you haven't already heard, a crack down seems to have begun... finally!

Payday loan company faces charges

quote:
Criminal charges will be laid today against a local payday lending company and its owners, CBC News has learned.

The expected charges, which come after a four-year investigation, will mark the first time in Canada a payday lending organization has been brought up on criminal charges.

The company, as well as its owners, will be charged with entering into an agreement with members of the public to charge a criminal interest rate, and receiving payment on a loan at a criminal rate.

...

"We discovered that payday loan companies are charging – rarely do they charge less than 600 per cent, and usually it's around 10,000 or 20,000 per cent," said Det. Sgt. Len Terlinski with the Winnipeg Police commercial crime unit.

If convicted, the owners cited in this case could face up to five years in jail and stiff fines.

...

While there is only one company cited in this case, police say many other companies charge similar amounts, and could soon face criminal charges themselves.



From: Kitchener-Waterloo | Registered: Sep 2001  |  IP: Logged
Fidel
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posted 22 January 2006 02:22 AM      Profile for Fidel     Send New Private Message      Edit/Delete Post
quote:
Originally posted by Amy:
Well excuse me Fidel, but sometimes people can go from relatively stable finance-wise to relatively screwed in the matter of weeks, so "the nerve" right back at you.

Besides experiencing a delayed reaction since April on this thread, I was being facetious then. Cell phones are not just the privilege of yuppies and business people anymore. Cell phones don't cost blue collar working poor up-front charges by Bell for connecting to the telephone system. Young people face I dunno how many moves from apartment to apartment in the begining, and sometimes bills don't get paid. I know because I've had to pay re-connection fees and deposits on utilities and rent more times than I can count. With cell phones, people have pre-paid access cards and don't have all those up-front Bell charges before they can make a phone call. And if they're that poor, text messaging should be, I say should be even less expensive than a person-to-person nailed-up telephone call.

So in that regard, young people seen standing in payday offices chatting on cell phones while wearing decent-looking apparel doesn't say to me that they don't have a need for cash. At a glance, I see a need for cash almost everwhere I look. It's sad to say so, but those people are probably struggling to make ends meet. Just to maintain a car, or pay for buses, or cabs if they're stuck on night shift, pay the slumlord and utilities, buy over-priced groceries etc - it costs to live in Canada.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
ReeferMadness
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posted 05 February 2006 03:17 AM      Profile for ReeferMadness     Send New Private Message      Edit/Delete Post
I knew a guy once lived on his overdraft. Every time he got paid, it would just barely get him out of debt and he started all over again. Was single and had a decent job - just no self-control

I'm concerned about the growth of these stores and their impacts on society and habitual users. I would like to see more statistics, however, to understand who those users are and why they're where they are.


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Fidel
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posted 05 February 2006 05:01 AM      Profile for Fidel     Send New Private Message      Edit/Delete Post
That's easy. Full-time payroll job creation in Canada is down since FTA, savings are down and low wage philanthropy is up in Canada. Payday loans are but part of the massive transfer of wealth from the working poor to the very rich. I just saved you from having to read Hurtig's, The Vanishing Nation. You owe me $25 bucks.
From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged

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