Shelby Ch'ng Police Services Board

(Cathy Alex/CBC)

A Thunder Bay city councillor says the Ontario city needs to take steps to address what she says is a lack of clarity from private payday lenders.

"There are tools that we can develop as a municipality, and I think it's important to ... promote the financial literacy,"  Shelby Ch'ng said, adding that she knows it's primarily a provincial and federal issue.

She said she would like "to make sure that these places have appropriate signage that explain clearly what the annual interest rate is when you borrow these loans."

Ch'ng spoke about the issue at the Oct. 12 meeting of the Thunder Bay Police Services Board, and is in the early stages of drafting a resolution regarding payday lending that will seek options from city administration.

Clarity needed

She said that even though payday lenders are legal, and governed by federal and provincial laws, there is room for more clarity.

Ch'ng cited labels on cigarette packs that outline the detrimental health effects of smoking as an example, or signs at the LCBO warning pregnant women against consuming alcohol.

"This particular issue is kind of near and dear to my heart," she said. "My youngest brother, he did some jail time when he was in his late teens, and when he got out of prison, he had a real difficult time making ends meet."

"He went to one of these places, and he did get a loan, and it ended up setting him back quite a lot," Ch'ng said. "You can actually do an online payday calculator, so for example the maximum that can be charged by any payday place is $21 on a $100 loan; that's only for 14 weeks."

"So when you do the calculation of what the pay period is over an entire year, it's 546 per cent you'd be paying on a $100 loan, so $546 that you'd be paying on a loan that you took out for $100 over the course of a year. I don't know how many people below the poverty line can afford an additional $546."

Ch'ng was speaking to the police services board about the issue because poverty is often cited as a contribution factor to crime.

"There's a crossover between who the police clients are, who the DSSAB (District Social Services Administration Board) clients are, who the payday lender clients are — all the research says it, so I'm not making this up," she said. "If police are maybe aware of these issues, and I can get their support, that would be great."

Kris Ketonen with files from Cathy Alex