Jodi Dean knows how it feels to be desperate to put food on the table.

A single mother of three children, two with special needs, she lives by child support. When her cheque didn't come through a year ago, she turned to a payday loan for help.

'We've essentially licensed this industry now.' - Ward 3 Councillor Matthew Green

"I made a choice to get a $300 loan, but I didn't read the small print," she said.  "A year it took me to pay off $300. That's insane…I spent $1,800 paying off $300."

Hamilton is set to become the first city in Ontario to regulate the payday loan industry to help protect people like Dean.

The planning committee Tuesday approved a bylaw that would require the outlets to let people know up-front the cost of borrowing, among other protections for consumers.

Payday Loan Building Locations

Graphic from Hamilton Roundtable for Poverty Reduction shows a number of payday loan locations located in the city's downtown core (Hamilton Roundtable for Poverty Reduction)

It's a way of curtailing what Ward 3 councillor Matthew Green called "economic violence."

"I'm very proud of our city today being the first municipality in the province in really taking a leadership role in first identifying the impact this has on our community, looking at tools within the municipal act to be able to regulate it," said Green, who proposed the bylaw in the summer of 2015.

"We've essentially licensed this industry now."

His proposal was amended and approved by the city's planning committee Tuesday. Under the bylaw going to council, payday loan businesses will be required to be licenced and do the following:

  • Advertise lending rates in comparison to traditional lending facilities.
  • Provide City of Hamilton approved credit counselling brochures.
  • Provide clients with debt reduction information and education.

Dean says the measures will help.

"It seems okay at the time, it's a Band-Aid, but when it comes to paying it off, it's impossible."

Dean says there needs to be more education and alternatives for customers looking for a solution. 

First of its kind 

Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, is also encourage by the committee's decision to push the motion forward. 

'People are suffering now and we know this industry will continue to prey on the most vulnerable until new regulations are put in place.' - Tom Cooper, Hamilton Roundtable for Poverty Reduction

"This is certainly a strong position our city council has taken to regulate licence local payday loan outlets, it's the first of its kind in Ontario," he said outside chambers.

 "As a community and as a society, I think we are better understanding of how predatory this lending industry is, and they are preying on some of the most vulnerable in our community; those on fixed incomes, those who are the working poor."

There are 34 payday loan locations in the Hamilton area. The majority are situated in the downtown core, an area where both Green and Cooper feel they are targeting geared to low-income and working poor residents.

A payday loan of $300 can accumulate up to $1,638 with interest in a year.

Cooper says the new by-law can't come soon enough. "People are suffering now and we know this industry will continue to prey on the most vulnerable until new regulations are put in place."

A public town hall meeting will take place on Monday, Feb. 22 at 7 p.m. at Tim Hortons Field, Scotiabank Business Allliance Media Court, 4th Floor, 64 Melrose Ave. N.

Payday Loan Business Model

Graphic from: Hamilton Roundtable for Poverty Reduction shows facts about who uses payday loan outlets (Hamilton Roundtable for Poverty Reduction)