Offering or Advertising High-Interest Loans Offence

Summary#

This Order fixes January 1, 2025 as the day when parts of the Budget Implementation Act, 2024, No. 1 — specifically subsections 336(1) and (2) and section 337 — come into force. In practice, that means the law will make it an offence to offer or advertise credit at an interest rate above the criminal rate and will clarify how the payday-loan exemption applies to offers.

What it does#

• Broadens the Criminal Code offence that targets very high interest rates so it also covers the offering or advertising of loans above the criminal rate, rather than only completed loan agreements.
• Changes the definitions used for the offence so offers and advertisements are captured.
• Clarifies that offers or agreements for payday loans that meet the legal payday-loan rules (the payday exemption in the Criminal Code) are not caught by the new offence.
• Aligns these coming-into-force amendments with earlier changes from the Budget Implementation Act, 2023, No. 1 and the Criminal Interest Rate Regulations that take effect the same day. Those earlier changes include lowering the criminal rate from 48% APR to 35% APR and capping some payday loan costs at $14 per $100 borrowed, and exempting certain loans such as those of $1,500 or less and terms of 62 days or less when provincial rules apply.
• Confirms possible penalties when the criminal-interest offence is prosecuted: up to 5 years’ imprisonment on indictment, or for summary conviction up to a $25,000 fine, or up to 2 years less a day’s imprisonment, or both.

Who's affected#

• People who lend money at very high rates, including online or alternative high-cost lenders and those who advertise such loans.
• Borrowers who use short-term, high-cost credit — often described as vulnerable people who may turn to payday or fringe lenders.
• Law enforcement and prosecutors, who will be able to act on advertisements and offers as well as completed loans.
• Provincial governments and licensed payday lenders, because the payday-loan exemption depends on provincial rules.
• The source names contacts at the Department of Finance and the Department of Justice for more information.

Why it matters#

• It makes it easier for police and prosecutors to go after predatory lenders who advertise or offer illegal loan rates, even if victims do not report or cannot prove a completed loan.
• It aims to better protect people who rely on short-term borrowing by closing a gap that let some lenders operate through offers or ads.
• Bringing these changes into force on January 1, 2025 together with the earlier rate and regulation changes reduces confusion for lenders, consumers, and regulators about what rules apply.