Agassiz’s Pioneer Trading Post has been ordered to pay $3,397.13 to the former owner of a vintage accordion after a judge found their interest rate was the equivalent of 300 per cent a year. (Grace Kennedy/The Observer)

B.C. pawn shop ordered to pay thousands after charging ‘criminal’ interest rate

An Agassiz pawn shop charged 25% interest a month, similar to other shops in the region

Agassiz’s Pioneer Trading Post has been ordered to pay more than $3,000 to the former owner of a vintage accordion, after a judge found the pawn shop’s interest rates were “criminal.”

In a judgment issued last week (Sept. 5), provincial court judge Kristen Mudstock said the Fraser Valley business could not legally charge 25 per cent interest monthly for a three-month loan agreement.

The business had taken Garry Hemminger’s antique accordion as security for a $500 loan back in 2017, which Hemminger would be required to pay back with the interest at the end of the three months. If he didn’t, the accordion would go to Pioneer Trading Post.

“The claimant and the defendants did not enter into this pawn agreement for an illegal purpose or with an evil intention. This was not a classic loan-sharking transaction,” Mudstock wrote in her decision.

However, because the interest rate exceeded 60 per cent a year (the annual interest rate was effectively 300 per cent, even if the loan was only in effect for three months), it was found to be a criminal interest rate.

SEE ALSO: 2-year investigations nets $900,000 in refunds for payday loan customers

According to the judgment, owners Tracey and Adrian Davies were unaware that their interest rate was considered criminal. However, they were still ordered to pay Hemminger back $3,900 for the 1978 Excelsior accordion — which had been sold in September of 2017 — minus the principal loan amount and the original $1.50 electronic transfer fee, as well as $1.37 in interest.

“We really debated if we were going to do pawn anymore,” Tracy Davies said about receiving the judgment.

Immediately after the judgment, Davies said she began searching to find out what other pawn shops were offering for their loans.

“The minute we got our judgment, we went online right away to find out what we were doing wrong,” she said.

She found that their interest rates were in line with what many pawn shops were asking around the region, and was in fact lower than some. A few Davies had contacted were asking for up to 30 per cent a month, while some offered lower interest rates, around 10 per cent, but had exorbitantly high “storage fees” for the item.

The main difference Davies found between their loan terms and other pawn shops is that Pioneer Trading Post offered theirs as a three-month loan, while others had it as a renewable one-month loan.

“It’s exactly the same as everyone else is doing,” she said. “We just didn’t renew it every month. That’s the only difference.”

SEE ALSO: B.C. government aims to stop concert ticket, payday loan gouging

Under the criminal code, the legal monthly interest rate is just five per cent.

Since receiving the judgment last week, Davies said the shop has altered its agreements for future loans to be a renewable monthly loan — something they had wanted to avoid originally because of the hardship it could cause for people looking for money.

“Can you get on your feet in one month?” she said. “That’s the major reason why we did it” as a three-month loan.

Davies said this is the first time in the shop’s three years in business that they had dealt with a legal situation like this.

The pair are looking into getting a lawyer to appeal the judgment, so they don’t have to pay thousands to Hemminger, who had never repaid the original loan or interest.



grace.kennedy@ahobserver.com

Like us on Facebook and follow us on Twitter

Just Posted

PHOTO GALLERY: Masset takes off on Terry Fox Run

More than $1,000 raised for Terry Fox Foundation

B.C. offers early retirement, training fund for forest workers

Communities eligible for $100,000 for permanent closures

Prince Rupert’s ferry issue is a North Coast issue, MLA Rice

Prince Rupert not alone in fight to save ferry to Ketchikan: Alaskan Rep. Ortiz

Brand new vessel for Massett Marine Rescue

The Tagwaal was unveiled to the public Sept. 6

First Nations given max compensation for Ottawa’s child-welfare discrimination

2016 ruling said feds didn’t give same funding for on-reserve kids as was given to off-reserve kids

Third instance of Trudeau in skin-darkening makeup emerges

Another instance of Trudeau using makeup to darken his face has emerged, within 24 hours of the first

Nelson man accused of swimming naked at Toronto aquarium expected to plead guilty

David Weaver, of Nelson, was arrested and charged in October of last year

VIDEO: Party leaders react to Trudeau’s brownface photo bombshell

Fallout from Justin Trudeau’s brownface photo, and two other instances, sure to dominate campaign

35 of 87 dogs in 2018 Williams Lake seizure were euthanized, BC SPCA confirm

The dogs did not respond to the behaviour modification and remained terrified of humans

B.C. ‘tent city’ disputes spark call for local government autonomy

UBCM backs Maple Ridge after province overrules city

B.C. drug dealers arrested after traffic stop near Banff turns into helicopter pursuit

Antonio Nolasco-Padia, 23, and Dina Anthony, 55, both well-known to Chilliwack law enforcement

B.C. MLA calls on province to restrict vaping as first related illness appears in Canada

Todd Stone, Liberal MLA for Kamloops-South Thompson, introduced an anti-vaping bill in April

Most Read