goeasy

goeasy Ltd.

Type	Public
Traded as	TSX: GSY
Industry	Financial services
Founded	1990
Headquarters	Mississauga, Ontario, Canada
Key people	David Ingram (Chief executive officer)
Website	Official website

goeasy Ltd. is a Canadian public alternative financial company based in Mississauga, Ontario. It operates in two segments: easyfinancial, which offers high-interest loans to subprime borrowers, and easyhome, which sells furniture and other durable goods on a rent-to-own basis. As of 2016, easyfinancial had $344 million in loans^[1], and goeasy had a market value of $400 million as of March 2017.^[2] It is listed on the Toronto Stock Exchange.

History

Goeasy Ltd. was founded in 1990 as RTO Enterprises. It went public on the Toronto Stock Exchange in 1993, through a reverse takeover.^[3] Its original focus was leasing furniture.^[4] In 2003, it renamed itself easyhome, as an attempt to create a nation-wide brand.^[5] In 2008, easyhome acquired Insta-Rent for $10 million.^[6] Around this time, the company launched easyfinancial, its financial services arm. easyfinancial was responsible for most of the growth of the company in the following years, with the easyfinancial segment eclipsing the easyhome segment in revenue by 2016.^[1]

In 2012, easyhome was forced to re-state its financial statements, and the majority of its board of directors resigned.^[7] In March 2014, there was speculation that easyhome might acquire some of the locations of struggling payday lender Cash Store.^[8] After Cash Store went out of business, easyhome acquired 47 former Cash Store locations in early 2015.^[9] In 2016, easyhome changed its trading name to goeasy, retaining the easyhome name for its rent-to-own durable good business. The change was made to reflect the increasing diversity of the company's activities.^[10]

Operations

Easyfinancial and easyhome principally target customers whose credit is not good enough for a bank loan, but is better than that of users of payday loans.^[7] As a result, their prices are lower than those of payday loans, and higher than those of bank loans.^[9] Like users of payday loans, most goeasy customers have bad credit and/or significant debts.^[9]

Easyhome's business consists of leasing furniture, appliances, and electronics to customers, most of whom have bad credit, on a rent-to-own basis. Customers generally own the product at the end of the lease term. Easyhome claims that it charges an interest rate of 29.9% on its leases, but the total effective interest rate might be higher, given easyhome's higher initial prices in comparison to other retailers.^[11]

Easyfinancial principally offers installment loans of $500 to $15,000, mainly unsecured, at nominal interest rates from 30% to 50%.^[1] Easyfinancial operates though in-store kiosks, as well as stand-alone branches and an online website.^[7][1] It had 210 kiosks and branches as of 2016.^[1] In 2016, 15% of easyfinancial loans went bad, a rate much higher than that of banks.^[1]

Controversy

Easyhome has often been criticized for its high prices, often hidden through relatively small monthly payments spread over a long period. For instance, in 2012, a Hewlett Packard PC which could be bought outright for a few hundred dollars had a total cost of $2000 at easyhome, spread out over three years.^[7] In 2015, the total cost of a 55-inch curved Samsung TV was estimated to be more than twice as much at easyhome than at a conventional electronics retailer.^[11] Easyfinancial has similarly been criticized for its high interest rates, with an average annual rate of around 50%.^[8] Many loans offered by easyfinancial are very close to the maximum rate of interest in Canada of 60%.^[9]

In February 2015, CBC Marketplace, an investigative consumer advocacy TV series, ran an episode focusing on easyfinancial's business tactics.^[12] Beyond the high interest rates charged, easyfinancial was also criticized for deceptive and misleading business practices. For instance, easyfinancial generally includes insurance in its loans, but does not quote the cost of the insurance in the cost of the loan. The insurance often doubles the effective interest rate of the loan. Easyfinancial also does not make clear that the insurance is optional. Easyfinancial was also criticized for pushing its customers into "debt traps" by offering re-financing, often before the original loan is paid off. Often, the company did not clearly communicate to its customers the eventual cost of the loans it offered.

In 2016, easyhome apologized for running a print flyer featuring a OMFG sale, because of the offensiveness of that acronym.^[13]

References