Payday loan industry defended as city ponders stricter rules

A lobbyist for the payday loan industry says there is a lot of misinformation about the services the companies provide.

Calgary city council is set to look at cracking down on the businesses, which offer short-term loans at interest rates as high as 23 per cent.

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There are concerns the businesses tend to set up shop in areas of the city where there are many people living in poverty.

But Canadian Payday Loan Association president Stan Keyes told the Calgary Eyeopener that's not the case.

Keyes said payday loan operations are legal and already heavily regulated in Alberta.

The borrower doesnt put only liens against their house, doesnt bring in a television set as they would in a pawn shop.

He said payday loan companies are expensive businesses to operate.

There is a cost to providing the product to the borrower. The borrower only shows identification, there is no credit check, he said.

At least three councillors feel payday loan businesses undercut poverty reduction strategies. Studies have found most payday loan customers are on a low-income and need emergency cash.

The motion before council calls for a clear definition to be developed for payday loan businesses operating in Calgary, so the land use bylaw could potentially be amended to limit the number of such shops in a neighbourhood.