Nick has loaned people money with the same bills those customers used to repay their delinquent loans moments earlier.
“They like having people in debt,” Nick wrote in an email, “because most of them eventually pay back, and are usually broke by the end.”
Nick, who worked for multiple payday loan companies over the course of several years, was one of more than a dozen people who got in touch with Global News following our story this week on one woman’s decision to leave the payday loan company whose practices, she says, were making her sick.
We got stories from people who loved working for payday loan companies and who hated it; who got badly needed cash to get them through a tough time and who found themselves taking out loans to repay loans for years on end.
We’ve used first names and initials because many of these people worry about repercussions if they talk about their jobs or their credit histories.
Alberta unveiled draft legislation Thursday to slash payday loan fees to the lowest in Canada. Ontario, Nova Scotia and jurisdictions across the country are considering similar reforms.
Google has said it’s banning ads for loans with terms of less than two months (and, in the U.S., with interest rates of more than 36 per cent).
In the meantime, credit unions and other organizations are stepping up to fill the real, multi-million-dollar need for short-term, small-sum loans for people whose credit isn’t good enough to borrow money elsewhere.
Canadian Payday Loan Association president Tony Irwin says that’s a bad idea. He argues being forced to charge no more than $15 per $100 loan will drive his members out of business.
A Deloitte study the association commissioned found it costs payday lenders at least $20.74 for every $100 loan.
“It will mean store closures. It will mean job losses. And it will mean a restriction of access to credit,” Irwin said.
“There’s no question: Stores are going to close.”
Nick doesn’t buy it.
“Costs of operation didn’t go up, wages rarely increased significantly, but the revenue number definitely increased,” he says.
The Calgary resident left the payday loan industry years ago “on bad terms,” but he still has a screenshot of an email he says is from a district manager at the payday loan company where he worked, chastising employees who weren’t lending customers the maximum amount.
“Management wanted us to eliminate the customer from the transaction by simply giving them money, a contract to sign, and a date to return with the loan and fees, and a way to collect it if they didn’t come back on that date,” Nick told Global News.
“I was once yelled at because a customer was very adamant they only wanted one hundred and fifty bucks, yet qualified for over a thousand.”
The payday loan association says most loan approval procedures are automated, and cites a study of transactions from three payday lending companies that found 62 per cent of borrowers in 2014 didn’t borrow the maximum amount, and the average customer borrowed 68.1 per cent of the maximum.
CHEQUED OUT: Inside the payday loan cycle
‘We’re not about scalping people for money’
Stephany had heard horror stories before starting her job at a payday loan company in Saskatchewan. They weren’t true, she said.
“I’ve begun to see it as a way to help people who have no other means.”
Stephany sees well-paid people who need a one-time cash infusion and the working poor who become regular customers.
It’s true payday loan employees are told to loan people the maximum amount they’re eligible for, she said.
“But, to me, it’s more about making sure that they have enough to make it.”
She thinks some companies are more ethical than others, though: She’s taken out loans from places she says have given her misleading information on what is and isn’t allowed by law.
“They’re not being honest with people.”
That said, she’d like to see clearer legislation — and, ideally, uniform laws across Canada. And she sees no problem with making payday loan companies charge lower fees.
“We’re not about scalping people for money.”
But they serve a purpose, she said.
“A lot of people, they either have such bad credit or don’t have the ability — banks won’t give them money,” she said.
“I don’t think getting rid of the industry is going to help.”
IN DEPTH: Canada’s financial instability trap
‘It was basically a downward spiral’
It started with first and last months’ rent. Greg needed it, and didn’t have that much cash on hand.
So he took out $750 from a payday loan place. And when that, plus the fee, was due two weeks later, he didn’t have the cash.
“It snowballed from there,” he said.
“You decide to go to another place, and another place, and another place. … It was basically a downward spiral.”
Two years later, he owed money to three different payday loan companies from which he kept borrowing the maximum amount allowable.
“I remember looking at my statement one day and saying, ‘I’m paying $700 a month in service fees?’”
He finally went to a credit counselling non-profit in Barrie, Ont., where he lives. They worked out a payment schedule for him. He hasn’t gone back — saved up, bought a house.
“You can rise from it, for sure.”
He’d like to see stricter regulation, although he isn’t sure the provincial government would go to the trouble of talking to former borrowers like him.
“Man, it’s robbery,” he said.
“I understand people need money but these fees, I was borrowing pretty much all of my paycheque but would have to pay back, like, $300 [in fees].”
Disclosure provisions are set out in regulations, the payday loan association’s Irwin said in an email, “including a poster in the lobby that shows the cost of a typical $300 loan.
“It is very important that the borrower know the cost.”
READ MORE: When you’re income-rich, but asset-poor
‘The pressure … was immense’
AB started working at a payday loan company “with the delusion I was helping people.”
She was quickly disabused, she said in an email.
“Sure, maybe one or two I help, but the majority I crushed and that in turn crushed me! I would watch people go further and further into debt.”
She began having panic attacks on her way to work. Started taking anti-anxiety medication.
“I would cry all the time thinking about how I was going to make it through my next shift. The pressures on staff to make ‘targets’ and ‘daily profit goals’ was immense,” she said.
“Leaving was my best decision ever but I’ll still run into old customers and worry about them and [wonder] if they are OK now.”
INCOME IMMOBILITY: Fewer Canadians are moving up – or down – the income ladder