Money Mart blasted for 50% gift card fee
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Dec 05, 2014  |  Vote 0    0

Money Mart blasted for 50% gift card fee

Ontario promises to review what NDP calls “disgusting” move by Money Mart to redeem gift cards for just 50 per cent of face value.

OurWindsor.Ca

Money Mart has put Ontario’s payday loans industry back in the crosshairs by redeeming gift cards from grocery stores and other retailers for just 50 per cent of their face value.

“There is a Grinch out there trying to steal Christmas,” New Democrat MPP Jagmeet Singh said Thursday, raising concerns about the “extraordinarily high” cost of the transactions and calling on Premier Kathleen Wynne’s government to ban them.

Consumer Minister David Orazietti was caught off-guard by the gift card offer — being tested at Money Marts in Hamilton and Niagara with an eye to a cross-Canada rollout — but pledged to get more information.

“This is a new twist on payday lending,” he said after noting it’s an “ongoing challenge” to keep track of trends in the controversial industry many blame for preying on the poor.

“It’s something we’re prepared to review and examine.”

The government has been reviewing the 2008 Payday Loans Act, which clamped down on high lending rates, and is preparing new regulations for next spring.

As the law now stands, payday lenders can charge a maximum fee of $21 for every $100 borrowed.

“We are going to continue to be vigilant with respect to these organizations,” Orazietti added, calling the 50 per cent fee a bid to “circumvent the spirit of what we’re trying to do” in tightening controls on the controversial payday loan industry.

Money Mart officials and the Canadian Payday Loans Association did not respond to requests for comment from the Star but an employee answering the phone at a central Hamilton Money Mart confirmed the 50 per cent fee.

“It’s been pretty successful,” the employee said.

It’s not clear what Money Mart does with the gift cards it buys at a steep discount from customers.

Singh (Bramalea—Gore—Malton) said the half-price redemptions are “simply disgusting” and take advantage of the vulnerable at a time when social service agencies are increasingly turning to gift cards as a more dignified way to aid the poor.

The gift cards, from grocery stores to clothing stores and others, give recipients better choice — particularly at Christmas — than handing out food hampers or other aid.

“It empowers families to shop for what they want,” said Glen Harkness of the Boys and Girls Club of Hamilton, calling the 50 per cent deal “a pure money grab.”

The danger is poor individuals and families will be tempted to cash in gift cards at the 50 per cent discount just to raise enough money for rent or other necessities, warned Tom Cooper of the Hamilton Roundtable on Poverty Reduction.

“It’s supposed to be the season of giving and Money Mart is taking away,” Cooper told the Star. “It’s a stressful time of year for people in poverty.”

Others will be tempted to redeem cards to get cash for alcohol, cigarettes or drugs — particularly if they have addiction problems, he said.

Orazietti said consumers should use gift cards at the store where they were intended to get their full value.

NDP Leader Andrea Horwath said the minister should be sending out a “strong signal” that the government will stop the “absolutely reprehensible” redemption fees.

“It’s shameful . . . it’s a greedy industry trying to make money off the backs of the most vulnerable.”

The review of the Payday Loans Act is considering more protections for consumers using online and mobile apps to get short-term loans, along with costs of multiple loans and loans that are rolled over, among other things.

There are more than 750 Payday loan shops in the province.

Toronto Star

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