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

Coroner’s inquest jury into Surrey Pretrial death calls for improvements

John Michael Murphy, 25, died on Aug. 3, 2016 after a fight with his cellmate

OUR VIEW: Trudeau’s lost opportunity in Surrey – again

Cabinet has five MPs from the West while Ontario gets 17, Quebec gets 11, and Atlantic provinces, four

Surrey Schools receiving $21K for mental health programs

Each district in B.C. is receiving a portion of the $2-million grant from the province

UPDATE: Pedestrian dies after train collision in Cloverdale

Police say the investigation is in the early stages

Family-friendly Christmas events to be held at Historic Stewart Farm

Surrey’s landmark pioneer farm house is offering visitors a vintage Christmas experience

VIDEO: ‘Climate emergency’ is Oxford’s 2019 Word of the Year

Other words on the shortlist included ‘extinction,’ ‘climate denial’ and ‘eco-anxiety’

Algae bloom killing farmed fish on Vancouver Island’s West Coast

DFO says four Cermaq Canada salmon farms affected, fish not infectious

Three cops investigated in connection to ex-Vancouver detective’s sexual misconduct

Fisher was convicted in 2018 after pleading guilty to kissing two young women who were witnesses in a criminal case

Violence response procedures updated for B.C. schools, police

ERASE program expands to target gangs, bullying of students

A pawsitive ending: Missing puppy found after nine-day search in Chilliwack

Pit bull Frankie ran from dog sitter booked through app

SkyTrain workers vote 96.8% in favour of job action, union says

CUPE 7000’s main issues have been wages, staffing, overtime and sick leave

Federal laws at heart of West’s anger up for debate, as Liberals begin outreach

Vancouver mayor to Trudeau’s western critics: ‘Get over yourselves’

Snowboard pioneer Jake Burton Carpenter dies at 65

He was diagnosed with testicular cancer in 2011

Most Read