According a report by the CBC, payday lenders in Ontario are under increased scrutiny by the government for using a loophole to escape the maximum fees set under the recent payday loan legislation. Although the legislation sets a maximum of 21% of the principal, some payday lenders are forcing their customers to purchase a debit card and possibly open a bank account in order to get the funds that they have borrowed. Their argument is essentially that the debit card isn’t an absolute necessity, so it doesn’t count as a mandatory fee which would be covered by the existing legislation. New laws have been proposed to close this loophole but the details have not yet been published.
This problem appears to be isolated to storefront lenders. Online payday loans in Ontario would have extraordinary difficulty in using these tactics, since the time delay in mailing a debit card versus mailing a cheque would be essentially the same. Under these circumstances, the speed of delivery of an online payday loan is a good argument for using the more modern online payday loan sites instead of traditional brick and mortar. Whether the new legislation will change that is a matter yet to be seen.