Many of us have seen the stories of the "Pandemic Profiteers": That guy who loaded up on crates of disinfectant wipes at Costco to resell at a profit online; the stores that are jacking up the prices of toilet paper, hand sanitizers and surgical masks.

There's another industry that is operating more subtly, but are just as perilous to the public good: Payday loan companies. These alternative lending institutions go by names such as Money Mart, Cash4You, CashMoney and many others and may be preying on our fears of not being able to pay the rent or purchase enough groceries.

According to a few of the bigger payday loan websites, recently they've been overwhelmed with applications for loans in response to the COVID-19 emergency. Payday lender Cash4You posted on their website: "Our online loan processing centres are above capacity. We ask for your patience as we are experiencing an unprecedented volume of online loan applications. We're reviewing them as fast as possible."

For those unfamiliar with this type of borrowing, payday loans are time-limited advances and often come with swift approvals and no credit checks. These loans can appeal particularly to part-time and precarious workers who fall into a financial emergency and need quick cash to pay a bill or put food on the table. That description pretty much accounts for millions of Canadians this month thanks to coronavirus shutdowns.

For those workers who fear a paycheque may not be coming in the near future and employment insurance benefits may be weeks away, a payday loan may seem like a desperate, but needed, option to purchase groceries or pay the rent.

But payday loans are a very bad idea, especially right now.

Many consumer advocates compare payday lenders to legalized loan sharks.

While the previous provincial government cut the amount that payday lenders can charge from $21 on $100 to $15 on $100, that still equates to annual interest rate of 391 per cent. To compare, the Criminal Code of Canada lists the criminal interest rates lenders are allowed to charge at 60 per cent. Because payday loans are time-limited, two weeks at a time advances, provincial governments across Canada allow the industry to charge rates above what would otherwise be considered usury.

In the past, many borrowers have fallen into deep debt as a result of borrowing from payday loan companies. According to Doug Hoyes, an insolvency trustee with Hoyes-Michalos, even prior to our current health crisis, a growing number of personal insolvencies could be tracked back to payday loans.

Often, customers fall into a payday loan trap and end up owing thousands, if not tens of thousands, to these fringe financial outlets. When money isn't available to pay the original loan, the high interest, plus cover basic needs, invariably customers feel pressured to borrow even more money. It becomes a cycle of dependency on these loans.

Hoyes noted, "This is a very stressful time for everyone. If rent is due, before committing to a very high interest loan, talk to your landlord and work out a plan. Getting a payday loan for two weeks if you won't have any more money in two weeks is not the solution."

Regrettably, neighbourhood payday loan stores as well as online payday loan operations will remain operating during our current State of Emergency. They are classified as an essential service because they lend money.

If the Ontario Government is not going to shut them down, the province must act immediately to reduce the interest rates the predatory payday loan industry is allowed to charge customers who are desperate and perhaps receptive to borrowing a payday loan to pay essential bills.

The provincial government could start by drastically reducing the amount of interest these predatory lenders are allowed to charge during this State of Emergency. According to Hoyes, bringing payday loan interest rates in line with the current 60 per cent Criminal Rate of Interest would mean borrowers would pay $2.30 on $100 instead of the current $15 on $100.

The payday loan industry's business model is predicated on taking advantage of desperate people. That's an unacceptable practice - now more than ever. Now is the time for us to come together and protect our collective interests - including the financial security of our neighbours.

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