Payday loan company ordered to pay back hundreds of dollars in fees to 61 Manitobans that were overcharged.
The Manitoba government’s consumer protection office said Cash Store Financial Services Inc. violated the maximum allowed fees for short-term loans – $ 17 for every $ 100 borrowed, including all associated fees.
The company, which owns The Cash Store and Instaloans, charged consumers additional fees for payment cards or electronic funds transfers, according to the protection office.
These charges brought the total cost of borrowing above the legal limit.
“It is very important that these thresholds are not exceeded because they are very vulnerable citizens,” Gail Anderson, director of the Office of Consumer Protection, told CBC News on Tuesday.
Gordon Repula, a retired farmer, told CBC News earlier this year about a line of credit he took out from The Cash Store – and the 33% fee he had to pay.
Repula said in February he had to repay $ 133.18 of the $ 100 he borrowed from a line of credit at a Cash Store in Winnipeg.
“This is the worst company we have ever loaned to,” he said.
The government says that people who overpayed at Cash Store or Instaloans stores between October 18, 2010 and October 17, 2012 may be eligible for a refund.
Consumers can call the Consumer Protection Office at 1-800-782-0067.
A spokesperson for Cash Store Financial Services told CBC News Tuesday night that he was following Manitoba laws and had paid back all the money he owed.
The lines of credit offered by the company are legal, the spokesperson added.
“Customers were literally getting ripped off”
The province’s crackdown on Cash Store Financial Services pleased Diane Robidoux of Xtra Cash, a payday lender near downtown Winnipeg.
“I’m really, really happy, because I don’t like what I’m seeing,” she said.
Robidoux said her store never charges more than what’s legally allowed, but added that she has heard many complaints about The Cash Store’s practices.
“Customers think $ 17 is a lot of money and I often want to say, ‘Well, you know, try this place and then come back,’” she said.
“Customers were literally getting ripped off – [that] was my opinion. “
Robidoux said many clients are not even aware that there is a law governing payday loans in Manitoba. The legislation entered into force in 2010.
The Credit Counseling Society of Manitoba says it has seen a 30% decrease in the number of people struggling with payday debt since then.
“These regulations are in place to protect consumers, and they are working,” said Christi Posner, counsel for the company.
But Robidoux said the law was not working well enough, pointing out that The Cash Store had allowed its payday loan license to expire, meaning its line of credit products bypass the law.
The provincial government said it was still working to update the legislation, but said no changes were planned at this time.