Class Action Suit Against Payday Lender
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UPDATED: Nov 20, 2012
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In Winnipeg, Canada, a woman is leading a class action lawsuit against two payday loan lenders that she claims have been charging customers excessive interest rates, according to the Winnipeg Free Press.
The two companies, The Cash Store and Instaloans, are charged with lending cash advances that had interest rates over amounts that are legal within the province of Manitoba. The current legal amount of interest on payday loans was changed as a result of new rules in 2010.
Under Manitoba law payday loans can only carry 17 percent interest rates. According to the lawsuit, both lenders charged 23 percent in interest rates to customers in addition to extra fees. They are accused of changing their lending practices in order to sidestep interest-rate capping regulations.
The class-action lawsuit also alleges that the two payday lenders have violated the Manitoba Consumer Protection Act as well as the PayDay Loans Act. Allegedly, both companies forced their customers to either buy cash or debit cards in order to gain access to their funds via an ATM machine.
Both companies are owned by one mother company, Cash Store Financial Services. This mother company also operates an online cash advance lender called Loansalberta Inc.
The lawsuit says that Loansalberta was formed in order to evade Manitoba province regulations. Evading regulations through their online operations allowed Loansalberta to lend multiple loans to the same customer, as well as offer loans to customers within five days after having paid off their original loans.
Similar lawsuits are being formed against both payday loan companies in British Columbia, Alberta, and Saskatchewan.
The class-action lawsuit aims to obtain repayment for overcharged customers. Assuming the court grants approval for the lawsuit, and it achieves its objectives, any and all customers who borrowed from either company will be entitled to proceeds from the settlement.