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The government of Ontario has issued a legislation about the licensing of payday loan companies and the protection of consumers. The law became effective in 2009. Here are some of the important features of the Payday Loans Act of 2008.

Ontario's balanced approach with regards to payday loans

This legislation is the result of Ontario's balanced approach towards payday loans where it considers the needs of both consumers and payday loan companies. The goal is to protect the rights of both borrowers and investors through a competitive regulatory standard.

Definition of payday loans

The law defines payday loans as short-term loans that are guaranteed by the borrower's pre-authorised debit or post-dated cheque. The usual requirement is an active chequing account, a recent utility bill that proves the borrower's current address, and three months of uninterrupted employment.

Features of the Payday Loans Act, 2008

The law has declared illegal a number of industry practices, such as rollover loans, starting July 1, 2009. And beginning April 1, 2009, payday loan companies and brokers need to get a license. Also effective July 1, 2009, borrowers have two days within which to cancel a loan without having to pay a penalty fee. The law also provided for the creation of an Ontario Payday Lending Education Fund that will be supported by the payday loan companies. And the total cost of borrowing cannot be more than $21 for every $100 borrowed.

Enforcement of the Payday Loans Act, 2008

The Ontario Government has been working with the other provinces to make sure that there is a uniform approach with regards to loan contracts and consumer protection. The Consumer Protection Branch of the Ministry of Government and Consumer Services is tasked of enforcing the law, handling consumer complaints, and imposing penalties for payday loan companies that violate some of the law's provisions.

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