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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Savona athletes bring bronze medals back from BC Winter Games

Akira Susanj and Alexander Teague both competed in Karate events

Drag races returning to Campbell Hill for Graffiti Days weekend

Four events are planned at the dragstrip starting in May

Historic Hat Creek set new visitor record during 2019 season

Heritage site looking to build on last year’s success in 2020

Interior Health leading the way with innovative therapy for stroke patients

Percentage of ischemic stroke patients who received treatment has risen dramatically

Former Clinton resident thinks he might have solved a history mystery

David Zant has a possible location near Clinton for where a historic picture was taken

VIDEO: Wet’suwet’en supporters vow to keep protesting at B.C. legislature

Supporters say they will continue ongoing action to hold government accountable

VIDEO: Province promotes ‘lifting each other up’ on 13th annual Pink Shirt Day

Students, MLAs, community members gathered at B.C. Parliament Buildings Wednesday

Prepare for new coronavirus like an emergency, health minister advises

About 81,000 people around the world have now become ill with COVID-19

B.C. residents in Wet’suwet’en territory have right to police presence: Public Safety Minister

Nevertheless, Bill Blair said officials remain ‘very anxious’ for the barricades to come down

Winnipeg police investigating graffiti on RCMP and other buildings

Manitoba Justice Minister Cliff Cullen denounced the vandalism

B.C. seniors’ watchdog calls for better oversight after recent problems at Retirement Concepts care homes

‘There is no financial incentive right now to be a good operator’ - Isobel Mackenzie

Trucking company fined $175K for Kootenay creek fuel spill

Decision handed down last Friday in Nelson court

B.C. city rebrands with new logo, cheeky slogan

‘Langford, where it all happens’ is the City’s new slogan

B.C. Liberals call for ban on foreign funds to pipeline protesters

Sierra Club, Wilderness Committee back Coastal GasLink blockades

Most Read