ACORN versus Payday Loan Sharks

Payday

by Rob McBean

In times of crisis, they say the world loves an authoritarian. Those who were around for September 11, 2001 will remember that idiotic Republican U.S. President George W. Bush’s approval rating went from 50% to 90% in under 2 weeks.

Today’s doomsday scenario, the COVID-19 pandemic, has given Ontario its own strongman to admire. Premier Doug (the Thug) Ford has enjoyed a similar surge in public opinion. At the end of 2019 several polls showed Premier Ford’s popularity cratering in the 20s. Today it is at 83 percent.

Ford wasted no time sending his cops and bylaw officers to our public parks to make sure we’re not on the monkey bars, and to patrol convenience store aisles hunting for toilet paper being sold at inflated prices. “The price-gougers will pay! We’re coming for you!” declares Ford to an adoring public.

Yet there are some price gougers who are escaping Conservative scrutiny, and that’s no accident. Loan sharks are free to exploit and profit from desperate workers. The payday lenders stand to gouge a very healthy margin out of this pandemic.

Doug Ford would be quite happy to ignore this gouging, while enjoying his newfound popularity and authoritarian powers. But a reformist organization, ACORN, is not going to let that happen without a fight.

ACORN is the Association of Community Organizations for Reform Now, active in Canada since 2004. It has become the most visible militant reformist organization in Ontario, stealing the spotlight from the Ontario Coalition Against Poverty.

Half of all Ontarians live pay cheque to pay cheque. The economy has been largely shut down to contain the spread of coronavirus. This could put hundreds of thousands in a dire situation — having to decide whether to buy food and medicine, or pay the rent. Fortunately, Employment Insurance has been expanded, and there is a new Canada Emergency Response Benefit available to some who do not qualify for EI. Still, many people are falling through the huge cracks in these programs. People are falling straight into the open jaws of loan sharks like Easy Financial and Money Mart.

The banks will not give loans at low interest to Ontarians who need money to pay for the necessities of life. The big banks are waiving certain fees and deferring some payments for a little while. That’s it. Anyone who can’t survive in this brutal climate, is being told to sink or swim.

In order not to drown immediately, many will need access to cash for groceries, medicine, fuel and other necessities. This is where our friendly neighborhood loan sharks enter the scene.

“Cash Money”, “Easy Financial” and “Money Mart” are the big players in the usury industry. They have been improving their predatory lending for over 20 years. Originally, they were invited into Ontario by the Mike Harris Tory government to take advantage of our most vulnerable citizens. Today they have loansharking down to a science that they practice with sadistic efficiency.

Let’s look at how these usurers ply their trade. They start by checking government ID, and current pay stubs. Next, the borrower must provide a valid, active bank account, which will be verified and attached to a pre-authorized payment before the loan is issued.

A standard payday loan is usually $300. Typically, it is paid back in about 2 weeks. The charge is $15/per hundred dollars loaned. If everything goes well and the loan is paid back two weeks later, the amount would be $345. That works out to an Annual Percentage Interest Rate of about 300%. It’s when people can’t pay it back that the usurers really get their hooks in.

The person will be charged an NSF fee from their bank of $45. The loan shark will add on its own late charge of $40. After that comes the compound interest. It is legal for the creditor to charge as much as 60% annual interest. In the loan that was studied for this example, the lender charged 46% annual interest, compounded DAILY for three months. If they still hadn’t been paid back in full three months later, their interest would drop to 26% compounded daily and would continue FOREVER.

It is in this way that the payday lenders can turn people into their debt slaves. The only way out of this trap would be extreme measures, such as closing the bank account attached by the loan shark or begging them for some kind of repayment plan. The ultimate way out would be to file for bankruptcy.

ACORN is responding to this travesty with a clearly articulated, progressive set of demands:

● Freeze payments and interest on all high interest loans with NO penalty

● banks should END NSF and account fees

● banks ought to create a small dollar loan product for low- and moderate-income people at zero interest during this crisis

These demands are being delivered in a coordinated, centralized manner. The leadership of ACORN hosts scheduled online events for activists who have a computer and internet connection. The activists log into specialized software, and reach out from their homes to ACORN’s members and supporters list. The activists direct the members and supporters to deliver scripted messages via voice mail or email to decision makers, i.e. Conservative and Liberal MPs and MPPs.

Such campaigns are of a reformist character — not something that revolutionaries get excited about. Is there anything that sets ACORN apart from other reformist organizations? Yes, two things.

Firstly, ACORN is a centralized, dues-based organization. There are leaders and organizers who direct and mobilize the rank and file, and attempt to develop contacts into full members. Secondly, ACORN is willing to take the next step after simple lobbying pressure tactics. ACORN has a history of full-scale mobilization of workers and the oppressed onto the streets.

It is these militant reform tactics, and the disciplined organizational model, that make ACORN stand out in a field of mediocre reformers.

Soon you will hear Doug Ford bragging about how he controlled the price of toilet paper and ensured delivery of hand sanitizer for all during the worst crisis since the Great Depression. It’s worth asking why he will toss hundreds of thousands of Ontarians to the payday lenders — to be gouged as we all struggle through this COVID-19 pandemic