Payday Loans and the Rise of Vampire Capitalism

Neon signs illuminate a payday loan business in Phoenix on Tuesday, April 6, 2010, one of 650 operating in the state with som
Neon signs illuminate a payday loan business in Phoenix on Tuesday, April 6, 2010, one of 650 operating in the state with some open 24-hours a day. A growing backlash against payday lending practices have prompted legislatures around the country to crack down on the businesses. (AP Photo/Ross D. Franklin)

I've been told all my life that there's no such thing as easy money. Lately, it seems like every billboard or bus shelter advertisement suggests otherwise.

We've all seen the ads from the various payday loan companies suggesting you can get $100 immediately for only a dollar or some other variation on the same basic pitch. I didn't give them any attention until I had my own run in with these vultures.

At the start of this year, I began receiving weird letters in the mail from companies like "Cash Money" out of Toronto. Having never dealt with them, I didn't even bother to open the envelopes thinking they were one of those scams claiming I had won the lottery.

Then I started getting phone calls from their collections departments. Having done debt collection to pay my way through school, I put them in their place quickly but learned that someone had used my information to set up bogus accounts with a number of different payday loan companies. They did this all online and never even had to step foot in an actual bank.

I went back and opened the letter from Cash Money. According to them, they had given me $600 on December 27th, 2013. By the time they sent me their letter dated January 6th, 2014, that sum of money had increased to $1286. Of course, this wasn't "interest" because that would be usury which is illegal. Instead, they dinged me with huge NSF and late fees which our government permits.

To make sure this is clear: the loan to a fraudulent account more than doubled in six business days.

When I reported this to the Stratford Police, the officer who handled my file informed me that the reason payday loan companies gouge customers like this is because the system is rife with fraud and default. This is to cover their losses.

The onus was then on me to prove the account wasn't mine. I had to speak to a lawyer, my bank, Equifax and Trans Union. All told, it cost me about $100 to clean up this mess. I could absorb that cost but if I was in the working poor it would have been a huge financial burden. If you don't jump through the hoops due to their greed and incompetence, your credit rating will suffer.

What century are we living in? Loan sharking hasn't been outlawed. It has been moved out of the shadows and normalized.

Payday loan companies market themselves to the working poor as a quick source of money in desperate situations. They then trap people in a cycle of indebtedness that compounds at breakneck speed. This kind of parasitic, predatory pursuit of profit is something out of a Charles Dickens novel. Payday loans are a multi-billion dollar industry in the west. They are immoral and completely unnecessary. There are far better ways to provide banking services to the low income community.

One alternative would be postal banking that would enable the poor to open bank accounts, cash cheques and borrow money in a responsible, ethical and controlled manner. This is already being done in many other industrialized countries but it requires a postal system to do it. As we dismantle the profitable and efficient Canada Post purely for ideological reasons, this option becomes tougher to implement.

Another alternative could be to obligate the mainstream banks to provide short term loans to people in a financial squeeze. Canadian banks make piles of money and the poor need to be plugged into the banking system if they're ever going to move up economically. Banks are regulated by the government. They should work with everyone in the community, including the poor. A change like this would be very easy to enact.

Yet another alternative would be to pay workers a living wage so they wouldn't be driven into the clutches of vampires just to make ends meet.

Payday loan companies have managed to fly beneath the radar of public scrutiny for far too long. I suspect it's because their victims are the weakest among us who don't have a voice. Luckily, there is someone standing up to them now. The Archbishop of Canterbury Justin Welby is leading the charge. He has denounced them from his pulpit repeatedly and is trying to organize an ethical, or dare I say it, Christian approach to banking for the least fortunate.

Why haven't other members of the clergy demonstrated the same moral courage and righteous anger?

We are now in the Christmas season and my Facebook feed is filled with honest outrage that people are taking Christ out of the holiday.

I agree; political correctness is obnoxious and annoying.

However, if you're more outraged by "happy holidays" than you are by a shadow banking system that extracts billions from the meek of the earth, you've probably already taken Christ out of Christmas and every other area of your life.