No cash for Cash Store clients
Cheque-cashing firm could lose licence but customers who were overcharged won’t get any money back, judge rules
- PUBLICATION: The Chronicle Herald, Halifax, Nova Scotia
- DATE: March 25, 2007
The Cash Store could lose its license to dish out loans in Nova Scotia for two weeks beginning April 16.
However, consumers who might have been overcharged by the payday lender won’t get any money back, states a Nova Scotia Supreme Court ruling released Friday.
The ruling upholds an earlier decision by Nova Scotia’s registrar of credit to suspend The Cash Store’s lending permit for 14 days for breaking the Consumer Protection Act by engaging in practices such as not disclosing the true cost of borrowing on its receipts.
The suspension, ordered last March, was stayed by the courts pending the outcome of The Cash Store’s appeal heard in the Supreme Court in October.
"The evidence supported (the registrar’s) findings that The Cash Store violated provisions of the act and regulations, did not carry out stipulated changes to operations and documents, and did not employ business practices in the best interest of borrowers," Justice John Murphy says in the decision.
"The Cash Store is receiving approximately 30 days notice of the suspension commencement date, similar to that provided in the registrar’s decision," Justice Murphy said.
But David Farrar, a Halifax lawyer representing the business, said Friday the court decision may not have any effect on The Cash Store’s operations.
"We’ll have to read this decision carefully but this may not impact on The Cash Store as it is currently operating," Mr. Farrar said.
The numbered company 3074700 Nova Scotia Ltd., named in the court decision, "is not the company that is presently operating The Cash Store," Mr. Farrar said.
Dave Morrison, director of risk management for The Cash Store in Edmonton, could not be reached for comment and no other spokesperson was available.
The Cash Store reportedly operates about a dozen locations in Nova Scotia. Its parent company, Rent Cash Inc., trades on the Toronto Stock Exchange under the symbol RCS and operates under three banners, The Cash Store, Instaloans and Insta-rent.
Service Nova Scotia, the government department responsible for overseeing payday operators, had no comment on the decision Friday. Spokeswoman Deborah Bayer said government lawyers had not yet even received the decision.
Justice Murphy says in his ruling that Nova Scotia’s registrar of credit does not have the authority to impose five conditions on The Cash Store including that it refund some borrowers to get its lending permit reinstated, and has set those conditions aside.
The registrar had demanded The Cash Store review all past loan contracts to identify excess charges and provide a full refund to borrowers.
"Examining and rectifying all contracts could be unduly onerous, if the lender had conducted a large volume of business over time," said the judge.
"The refund requirement is akin to awarding a civil remedy to borrowers, which the legislation does not authorize."
In an affidavit filed with the court, The Cash Store states the amount the registrar had directed it to refund was well over $1 million.
The registrar found The Cash Store failed to disclose all of its fees to customers in writing and that its receipts did not reflect the true cost of borrowing. The registrar also found the company did not follow good business practices, requiring customers to provide it with a security cheque in addition to a cheque covering their loan interest and fees, according to court documents.
Nova Scotia recently passed new legislation to govern payday loan companies under which the Utility and Review Board would set maximum allowable interest rates. However, the regulations cannot be enforced until federal legislation is passed giving the provinces authority to regulate the burgeoning industry. The federal bill is currently before the Senate finance committee.
The Canadian Payday Loan Association, which represents 24 companies in the industry has been strongly pushing all provinces to enact legislation to protect consumers from payday loan companies that have poor business practices.
The Cash Store, one of the group’s founding members, is no longer a member.
Stan Keyes, president of the association, declined comment on the case Friday.