A payday loan is a fast, short-term loan with high fees. Payday loans appeared in the Canadian marketplace in the 1990s, operated by privately owned companies, to fill a gap in the finance sector. Approximately 1,400 payday loan establishments are operating in Canada (Buckland et. al, 2018). Payday loan establishments market the loans to cover a cash shortfall usually until the next paycheque. The most recent data indicates over 4.5 million short-term loans, valued at $2.2 billion, were provided to Canadians in 2014, growing to over 6 million short-term loans by 2016 (Bond, 2016).

Laws Regulating Payday Loan Establishments

Laws regulating payday loan lenders can be found across jurisdictions.

The Criminal Code of Canada, R.S.C. 1985, c. C-46 makes it a crime to offer payday loans unless regulated within a province (section 347.1(3)). The Criminal Code defines a “payday loan” as "advancement of money in exchange for a post -dated cheque, a pre-authorized debit or a future payment of similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawn broking, a line of credit or a credit card.".

Ontario regulates payday loans through The Payday Loans Act, 2008. The regulation came about in 2018.

In 2015, the Ministry of Government and Consumer Services (MGCS) began consulting with municipalities across the province to strengthen consumer financial protection on payday loans, cheque cashing, money transfer services and experiences with debt collection agencies. The issues put forward for review by the MGCS often have an impact on people living on a low-income. Payday loans are the most expensive form of consumer loans in Ontario, making it difficult to repay in full by the next paycheque. Advocates have expressed caution towards payday loans because of their negative impact on low-income households.

The Community Development & Health Services (CDHS) Department worked closely with the MGCS to schedule, promote and invite stakeholders for input, including members of City Council, administration and local community organizations representing multiple sectors. On July 26 and July 27, 2015, representatives from the MGCS held consultations at MacKenzie Hall Cultural Centre in Sandwich Towne. The