It’s not the first time a provider of payday loans has been taken to court, and we have a feeling it won’t be the last. This time it’s The Cash Store that’s under fire, and the way they are distributing their payday loans.
The application for legal action to begin was made on June 7 in the Ontario Superior Court of Justice by the Ontario government. The government would like the court to review the lines of credit The Cash Store currently offers their customers. According to the government, offering these lines of credit essentially puts The Cash Store in the payday loan business, which would make them subject to the Ontario Payday Loan Act, which came into effect in 2008. The government also says that when offering lines of credit, the store must also apply for a payday loan broker license.
The reason The Cash Store has said that it now offers a line of credit instead of cash for payday loans is because they don’t want to put their employees at risk by handling large amounts of cash – and they will not change the way they do business, they say. (One has to wonder if they thought of that before calling themselves The Cash Store.)
This isn’t the first time the Ontario government and The Cash Store have clashed though. Back in February Ontario served its notice that it intended to revoke the license of the company due to the fact that they charge fees for their service, putting them over the $21 cap on every $100 they lent.
But The Cash Store is fighting that one, saying that the product their exorbitant fees are on isn’t a payday loan and so, not subject to the same rules as them. They filed for their own judicial review in April, and won’t comment as the case appears before the courts.
And Ontario isn’t the only province that The Cash Store has had problems in. Alberta, Manitoba, and British Columbia have all taken the payday loan sharks to court, trying to get the courts to review how much the store is charging customers, and what fair practices they may or may not be participating in.
It wasn’t until the Payday Loans Act went into effect in 2008 that The Cash Store changed their product offering from payday loans to lines of credit – with the sole reason being so that they didn’t have to follow the same laws and rules as everyone else.
The lobby group for the industry, The Canadian Payday Loan Association, says that it applauds the government’s efforts to continue to strive for fairness in all aspects of payday loans.
In a statement they said that the Association “strongly supports the regulation and licensing of the payday loan product and the lender who offer the product as they are an important credit option used by many Ontario residents and delivery of this product in a fair and responsible manner is essential.”