Motion Denied, Class Action Suit Against Payday Advance Lender Proceeds in Canada
By Desmond CarlislePayday Loan Writer
The Toronto Star reports that this week was not a good one for National Money Mart, a Canadian company that sells itself as a convenient means for real people to get fast cash.
First, the chain of 350 payday loan outlets was criticized by a grassroots organization known for its campaigns against predatory lending here and south of the border. Then, the Supreme Court of Canada dismissed a bid by the company, owned by U.S. parent company Dollar Financial Corp., to derail a class-action suit launched by Windsor, Ont., pensioner Margaret Smith, who alleges the fees and interest violate Canadian law.
"It puts a little bit of heat on Money Mart," said lawyer Jasminka Kalajdzic, of Sutts & Strosberg, the Windsor law firm representing Smith. "It's a major event in that, had they won, that effectively would have been the end of class-action litigation against Money Mart."
The Supreme Court of Canada dismissed Money Mart's bid to throw out lower court decisions that found waivers the company had customers sign did not preclude them from suing the company.
Smith's proposed class action suit now moves forward in a case that is being closely watched by payday loan borrowers in other proposed class actions against payday lenders across Canada, as well as by lawmakers who have been looking at ways to regulate the business.
In May, a judge assigned to Smith's case is scheduled to hear arguments over whether the fees and interest charged on the company's payday loans, when combined and calculated as interest, violate section 347 of the Criminal Code, which sets the maximum APR at 60.
To date, no payday cash advance lender has been charged and successfully prosecuted under the law. On Thursday, the Canadian and U.S. chapters of the Association of Community Originations for Reform Now (ACORN) lambasted Money Mart while demonstrating outside locations in Toronto, Vancouver, and 30 U.S. cities.
"By deliberately setting more debt traps for low-income families across Canada than any other payday lender, Money Mart continues to lead the way in doing the most harm to the largest number of people who find it necessary to use Money Mart's products," ACORN Toronto member Sharol Jason said in a press release.
The company rarely responds to questions from the media, but claims its faxless payday loan product is amongst the cheapest in the industry and provides a service consumers want and need. Critics say the high fees and interest charged on the payday advance loans trap vulnerable borrowers in a cycle of debt.
A 2004 Toronto Star series on the payday industry profiled a dozen Toronto payday lending businesses, including Money Mart, and found that the fees and interest on a typical two-week loan ranged from 390 to 900 percent annually. Money Mart's was indeed among the cheapest.
Nevertheless, at least eight proposed class action suits against Canada payday loan enterprises are underway —- each alleging the fees and interest rates charged are criminal acts. In Smith's case, the representative is seeking $555 million on behalf of Canadian borrowers from Money Mart and its U.S. parent company.
March 13th, 2006 at 3:07 pm
[…] Selinger also plans to introduce legislation this spring to regulate the payday lending industry. In the past, he has said such legislation would outlaw the practice of customers giving payday loan providers the right to seize part of their paychecks, while banning rollover loans that see customers take out a second loan to pay off the first, at compound interest. […]
March 13th, 2006 at 3:14 pm
[…] Dollar Financial Expands Canadian Payday Loan Business; Adds $16.8M in Revenue By Ed Smith Payday Loan Writer The Dollar Financial Group has acquired 11 payday loan stores in western Canada and will soon complete deals for two more in the region, the Philadelphia Business Journal said Monday. The stores were previously under the control of a franchisee of National Money Mart (Dollar’s Canadian subsidiary), which had minority ownership in seven of the cash advance stores. […]
June 8th, 2006 at 9:21 am
[…] In December, a Citizen reporter obtained payday loans at rates actuaries said appear to violate the Criminal Code. Two $300 cash loans were taken, one from a Money Mart store on Elgin Street and the other from a CashMoney outlet on Bank Street. Three days later, Money Mart required $339.41 repayment, which worked out to an annual interest rate of more than 300,000 per cent. CashMoney required $375, which equated to a 61-trillion-per-cent rate. […]