Canadian Payday Loan Ruling Will Have Far-Reaching Effect
By J.J. CameronPayday Loan Writer
All it takes is one.
Now that a British Columbia judge has ruled that payday loans from A OK, Inc. are charging "criminal" interest rates, the ruling could easily have an effect on other cash advance lenders in the country.
There are dozens of similar class-action lawsuits pending in Canada - and lawyers who are bringing them against supposedly cheap payday loan companies look at this initial judgment as setting a precedent.
"It's the first class-action, of which there are several out there, in which a decision has been rendered involving the legality of the fees that were charged by a payday-loan company," said Paul Bennett, a Vancouver-based lawyer with Hordo & Bennett."I think it has significant implications to the other cases that are outstanding. We believe the reasoning in this case will apply to any of the fees that are charged by any of the other payday loan operators."
While a decision in the British Columbia Supreme Court is not binding in Ontario, it will be given significant weight by the court, lawyers there said.
B.C. Supreme Court Justice Brenda Brown ruled that late fees and processing fees charged by the aforementioned payday loan company are, indeed, interest. She found that the company was charging a rate above 60 percent - the maximum amount of interest that can be charged under Canada's Criminal Code. Justice Brown asked lawyers to submit further evidence before she determines what relief should be paid to the plaintiffs.
Bruce Hallsor, the lawyer representing A OK Payday Loans, said this decision will be looked at by other courts, but "it's fully expected that this issue will be raised in higher courts." His client has not yet decided whether to appeal, but other quick payday advance firms are undoubtedly hoping it does.
