On a sunny afternoon in Vanier, red flags waved and chanting could be heard in the parking lot of a strip mall on Donald Street. A crowd of 20 people answered a voice from a megaphone: “What do we want? Fair banking! When do we want it? NOW!“
At the Dec. 14 rally, members of ACORN — an advocacy group representing low- and moderate-income citizens — shared their experiences of dealing with what they called “predatory lenders” in a national day of action for fair banking.
In Ottawa, the group delivered an open letter addressed to the CEO of easyfinancial, a personal loan company, demanding lower interest rates and calling for an end to what ACORN claims are unfair lending practices.
After a similar protest in Toronto in October, easyfinancial parent company goeasy issued a statement to Global News, saying its loans help Canadians rebuild their credit ratings until they’re able to borrow at lower interest rates from banks and other lenders.
“With over 8.4 million Canadians with non-prime credit scores, our customers are hardworking everyday Canadians that have typically been turned down by banks and traditional lenders,” the company told Global News. “Often met by life’s circumstances that have negatively impacted their credit, they turn to easyfinancial for financial relief and a second chance.”
In a Dec. 9 press release announcing that goeasy had surpassed $2 billion in its consumer lending portfolio, the company stated that its lending division “has proudly served nearly 750,000 Canadians, with 1 out of 3 graduating back to prime credit and over 60 per cent improving their credit score within 12 months of borrowing.”
“What we want is to ask the government to step in and criminalize high interest rates.”— Bader Abu-Zahra, chairman, Vanier chapter of ACORN
Bader Abu-Zahra, chairman of the Vanier chapter of ACORN, said: “What we want is to ask the government to step in and criminalize high interest rates.”
The Association of Community Organizations for Reform Now is a national organization representing low- and moderate-income families with more than 130,000 members organized in 24 neighbourhood-scale chapters in nine Canadian cities, including Ottawa.
In Quebec and in the U.S., the interest rate that lenders can charge is capped at 36 per cent, while in Ontario some companies charge up to 60 per cent in annual interest, according to ACORN. It’s a practice that Abu-Zahra claims takes advantage of society’s most vulnerable people.
“Because some people don’t have enough money to do certain emergency things,” said Abu-Zahra, “like if their car broke down, or if someone is sick and they have to buy a medication not covered by OHIP, they have no choice but to go to those payday lenders and borrow money” at exceedingly high interest rates.
According to a survey by ACORN, there was a 300-per-cent increase between 2016 and 2020 in the number of Canadians who took out an instalment loan. Instalment loans have an annual interest rate of 60 per cent in addition to insurance, fees and other charges, while payday loans, which can’t be larger than $1,500, can have annualized interest rates as high as 500 per cent.
The U.S.-based Pew Charitable Trusts, a global non-governmental organization seeking to improve public policy and inform the public, published a 2016 study showing that the average payday loan borrower spends an average of $520 in fees to repeatedly borrow $375.
One of ACORN’s members, Grace Iyobosa, said she took out a $5,000 loan four years ago to help pay for basic needs and is still paying it off.
“The interest rate on these loans is just too high. The balance that I owe is much more than what I took out despite making regular payments for quite some time,” said Iyobosa. “These lenders are just putting people into debt – they keep calling me, harassing, and keep telling me that they want to start all over again.”
According to Abu-Zahra, the current banking system is set up to encourage low-income earners to seek these risky loans, as high non-sufficient fund (NSF) fees at banks push people to high-interest lenders.
ACORN is calling on the federal government to lower the maximum interest rate to 30 per cent, lower NSF fees from $45 to $10, add payday lending to the Criminal Code, and mandate banks to provide better access to affordable loans to low- and moderate-income people.
The federal government announced in its 2021 budget that a consultation will be launched to consider lowering the legal rate of interest in the Criminal Code of Canada.
While ACORN’s members wait for government action, they called on the lending companies themselves to lower their interest rates.
The crowd marched through the parking lot towards EasyFinancial, continuing the chants for fair banking as Abu-Zahra went inside.
As the large group gathered around the front entrance, nearby store owners and clients poked their heads out doors to see what the chanting was about.
As Abu-Zahra exited the building a few minutes later, he addressed the waiting crowd, announcing that a company employee inside had received a copy of ACORN’s letter and would see about sending it to EasyFinancial’s CEO.
“It was a success because they let us in and received our letter,” Abu-Zahra said. Last year, he noted, the group had tried to deliver a similar letter to another lender, but the company had simply refused to let the protesters into the building.
“It is very hard to have our voices heard,” said Abu-Zahra. “People who have disability support or people who have no money — unfortunately very few pay attention to those people.”