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Direct Sales, Future Performance, and Time Share Contracts (11:V): Difference between revisions

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=== 2. Payday Loans ===
=== 2. Payday Loans ===


Section 2 of ''Payday Loans Regulation'', BC Reg 57/2009 designates payday lenders as a “designated activity” under s 142 of the ''BPCPA''. A payday lender "means a person who offers, arranges, provides or otherwise facilitates payday loans to or for consumers" and includes "a person who, for compensation, arranges, negotiates or facilitates an extension of credit". Section 143 requires anyone who participates in a designated activity to carry a license. A payday lender must carry a separate license for each operating location. They must have a sign at each location displaying this license number, the maximum charges permitted in BC (15% of principal), the amount they charge, the total cost of borrowing $300 for 14 days, and the annual percentage rate they charge.
Under the ''Payday Loans Regulation'', BC Reg 57/2009, s 2 designates payday lenders as a “designated activity” under s 142 of the ''BPCPA''. A payday lender “means a person who offers, arranges, provides or otherwise facilitates payday loans to or for consumers” and includes “a person who, for compensation, arranges, negotiates or facilitates an extension of credit”. Anyone who participates in a designated activity must carry a license (s 143). A payday lender must carry a separate license for each operating location. They must have a sign at each location displaying this license number, the maximum charges permitted in BC (15% of principal), the amount they charge, the total cost of borrowing $300 for 14 days, and the annual percentage rate they charge.


The regulations also set limits on the amount of interest that can be applied, mirroring s 347 of the ''Criminal Code''.  
The regulations also set limits on the amount of interest that can be applied, mirroring s 347 of the ''Criminal Code''.  
*i) The maximum amount that can be charged on a payday loan is $15 for every $100 borrowed including all charges and fees.
* The maximum amount that can be charged on a payday loan is $15 for every $100 borrowed including all charges and fees.
*ii) In addition, a payday loan cannot exceed 50% of the borrower's net pay to be received during a single pay period within the payday loan term.
* In addition, a payday loan cannot exceed 50% of the borrower's net pay to be received during a single pay period within the payday loan term.
*iii) If the repayment amount is not paid, default fees cannot exceed 30% per annum on the outstanding principal.
* If the repayment amount is not paid, default fees cannot exceed 30% per annum on the outstanding principal.


Thus, payday loans in BC are permitted under ''Criminal Code'' section 347.1, as long as they follow the provincial requirements.
Thus, payday loans in BC are permitted under ''Criminal Code'' s 347.1, as long as they follow the provincial requirements.  


These requirements do set out a number of additional restrictions on payday lenders (s 112.08). Notably, a payday lender may '''not''':
These requirements do set out a number of additional restrictions on payday lenders (''BPCPA'' s 112.08). Notably, a payday lender may '''not''':
*(a) sell insurance to or for the borrower, or require or request that the borrower insure a payday loan;
* Sell insurance to or for the borrower, or require or request that the borrower insure a payday loan;
* Issue a new payday loan to a borrower who already has a payday loan issued by the lender;
* Require, request or accept consent from a borrower to use or disclose the borrower's personal information for a purpose other than offering, arranging, providing or otherwise facilitating a payday loan;
* Require, request or accept any undated cheque;
* Require, request or accept any post-dated cheque, pre-authorized debit or future payment of a similar nature, for any amount exceeding the amount to repay the payday loan by the due date, including interest and permissible charges (although, a one-time fee of $20 is allowed for a dishonoured cheque or pre-authorized debit – see s 17(2)(b) of the ''Payday Loans Regulation'');
* Require or request any payment from the borrower before it is due under the loan agreement;
* Grant rollovers (i.e. charge a fee to extend a loan’s due date);
* Require, request or accept an assignment of wages from the borrower (and if they do the assignment of wages is not valid);
* Require, request or accept from the borrower or any other person, as security for a payday loan, any personal property, real property, or documentation that could be used to transfer title in personal property or real property; or
* Discount the principal amount of a payday loan by deducting or withholding from the initial advance an amount representing any portion of the total cost of credit.


*(b) issue a new payday loan to a borrower who already has a payday loan issued by the lender;
Additionally, there is a mandatory period set out in the regulations where a consumer is allowed to return the money and cancel the payday loan. This period begins on the date that the borrower receives the first advance and expires at the end of the second day that the payday lender is open for business after that first advance (''Payday Loans Regulation'' s 14.2(1)).
 
*(c) require, request or accept consent from a borrower to use or disclose the borrower's personal information for a purpose other than offering, arranging, providing or otherwise facilitating a payday loan;
 
*(d) require, request or accept any undated cheque;
 
*(e) require, request or accept any post-dated cheque, pre-authorized debit or future payment of a similar nature, for any amount exceeding the amount to repay the payday loan by the due date, including interest and permissible charges (although, a one-time fee of $20 is allowed for a dishonoured cheque or pre-authorized debit);
 
*(f) require or request any payment from the borrower before it is due under the loan agreement;
 
*(g) grant rollovers (i.e. charge a fee to extend a loan’s due date);
 
*(h) require, request or accept an assignment of wages from the borrower (and if they do the assignment of wages is not valid);
 
*(i) require, request or accept from the borrower or any other person, as security for a payday loan, any personal property, real property, or documentation that could be used to transfer title in personal property or real property;
 
*(j) discount the principal amount of a payday loan by deducting or withholding from the initial advance an amount representing any portion of the total cost of credit;
 
Additionally, there is a mandatory period set out in the regulations where a consumer is allowed to return the money and cancel the payday loan. This period begins on the date that the borrower receives the first advance and expires at the end of the second day that the payday lender is open for business after that first advance.


=== 3. High-Cost Credit Products ===
=== 3. High-Cost Credit Products ===
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