Cash Store customers to share $10-million settlement

ACTION LINE

The payday cash advances were instant, but recovering the money consumers overpaid in interest and administration fees has taken years.

But there’s now $10 million waiting to be shared.

It’s estimated that as many as 100,000 Canadians — the majority of them Ontarians — overpaid when borrowing from Cash Store Financial after Sept. 1, 2011, the date new provincial payday regulations became law.

At one time, the Edmontonbased company had 190 Cash Store and Instaloans locations in Ontario and about 42 of them were within this newspaper’s circulation area. The locations between OakvilleHamilton-Brantford-Niagara Region served 40,000 consumers and provided 165,000 loans.

Under the Ontario Payday Loans Act and Regulations, licensed lenders cannot charge more than 21 per cent for providing consumers with payday loans or lines of credit.

But, for years, consumers had complained to the Ontario Ministry of Government and Consumer Services, claiming they were paying far more when borrowing from the Cash Store and Instaloans.

According to ministry media and issues analyst Sue Carroll, that ministry has received 574 complaints and inquiries since Jan. 1, 2008.

The Cash Store is now out of business.

But, thanks to an Ontario Superior Court ruling late last year, there’s a $10-million settlement waiting to be shared.

“The class-action suit started in 2012 when our firm was retained by a borrower to challenge the legality of the cost of borrowing on payday loans from Cash Store and Instaloans and to seek recovery of any unlawful amounts paid by Ontario borrowers,” said spokesperson Mary Zajac of Argyle Public Relationships on behalf of London, Ont., law firm Harrison Pensa.

“The suit alleged the Cash Store and Instaloans were charging borrowers more in fees and interest than was permitted under the Payday Loans Act and Regulations. The legislation prescribes a statutory limit on the cost of borrowing (all fees and interest) of 21 cents on every dollar borrowed. A payday loan transaction usually involves a twoweek pay period as the term for the loan.”

Zajac said the Cash Store was charging as much as 45 per cent.

Jon Foreman of Harrison Pensa said his law firm faced many challenges when acting on behalf of consumers.

“Cash Store and Instaloans are no longer in business,” Foreman says. “They declared insolvency in early 2014 and all of their assets were sold. We claimed a share of the remaining assets in the insolvency process by fighting for priority relative to a very large group of secured creditors. We also sued and pursued other solvent defendants that were involved in the Cash Store’s business in order to assemble this settlement of $10 million.”

According to the law firm, each consumer who applies will get at least $50 or more. There is no way of predicting how many will apply and it will take months to confirm claims and issue payments.

“I always say, if you are going to be good at recovering money, you had best be good at distributing it,” Foreman told Action Line in an interview July 7.

His firm is blitzing consumers — emailing, texting, robo-calling and using mass media and social media — urging them to apply for a refund.

“We’ve made it as easy as possible for people to get their money back, but the challenge is to ensure borrowers come forward and file claims for their share of the settlement.”

Consumers must file a claim before Oct. 31. For more information, visit TakeBackYourCash.com, or reprendretonargent.com. Consumers can also call 1-866-840-2631.

The class-action suit wasn’t the only move on the Cash Store. On Feb. 4, 2013, the Ontario Registrar of Payday Loans issued a proposal to revoke its lending licence, citing numerous violations of the Payday Loans Act. On July 4, 2013, Cash Store allowed its lending licence to expire and, on April 12, 2014, the firm declared insolvency.

Its 2011 judicial challenge of the amendments to the Payday Loans Act was eventually dismissed and the Cash Store and Instaloans were convicted and fined $150,000 for operating without a lender’s licence.

The Canadian Payday Loan Association says its group’s almost 1,000 locations provide short-term lending or cheque-cashing services to two million Canadians each year.