One of Canada’s largest payday loan companies is being ordered to pay tens of thousands of dollars in penalties and customer reimbursements for violating the province’s new payday loan regulations.
Edmonton-based Cash Store Financial Services Inc. operating as the Cash Store and Instaloan, has been ordered to pay $25,000 in penalties, provide restitution to consumers who were charged unlawful fees on their loans and reimburse investigation costs incurred by Consumer Protection BC, the agency responsible for the province’s consumer protection laws.
Manjit Bains, vice-president of corporate relations for Consumer Protection BC said in an interview that the company’s violations included charging fees for cash cards, charging more than the 23% of the principal of a loan in fees and making loan advances contingent on the purchase of a cash card.
“In this particular situation, we received a number of complaints from consumers, which we investigated and followed up with the business, and have been working with them using our progressive enforcement options to try to get voluntary compliance. To date, we were unsuccessful.”
According to B.C.’s new payday loan regulations, companies must not only be licensed, they must not charge more than 23% of their loan in fees, should not charge for a cash card and give consumers options on how they can receive their money, among several other regulations.
Cash Store did not respond to a request for interview by press time.
Bains noted that the company has 30 days to appeal the agency’s decision.
She noted the agency has a string of progressive enforcement options at their disposal, up to and including court action and revoking the company’s license to operate in B.C. if the company doesn’t change its practices.
“There is a process to be followed and we’ll wait to hear back from the company, which has 30 days to appeal this decision.”
While this is the first administrative penalty levied against a payday loan company in B.C., it is not likely to dent the company’s bottom line. Cash Store Financial reported annual revenue of $61.7 million for the year ending June 30, up from $54.6 million in 2009. Net income rose to $18.8 million from $14.6 million.
Bains said the agency is currently investigating 29 similar complaints brought forward by consumers. For more information about B.C.’s payday loan regulations, visit www.consumerprotectionbc.ca.