Canada’s leading payday lender has agreed to pay $ 100 million to customers in Ontario who complained they were scammed by usurious interest rates.
“It’s been a long road,” said Ron Oriet, 36, of Windsor. “I’m glad it’s over. It’s been six years.”
A licensed project manager who had borrowed from Money Mart to repay student loans and car payments, Oriet was part of a class action lawsuit filed in 2003 on behalf of 264,000 borrowers. Once the proposed settlement – it includes $ 27.5 million in cash, $ 43 million in canceled debt and $ 30 million in credits – is approved by the court, the average payment will be around $ 380.
“We believe this is fair and reasonable and in the best interests of the members of the group,” lawyer Harvey Strosberg said yesterday.
From the Berwyn, Pa. Headquarters of Money Mart’s parent company, Dollar Financial Corp., CEO Jeff Weiss said in a statement, “While we don’t admit any wrongdoing… expected.”
In 2004, a Toronto Star the survey found that payday loans carried annualized interest rates ranging from 390 to 891 percent.
In 2007, the federal government amended the law to allow provinces and territories to regulate the payday lending industry and place limits on the cost of borrowing.
In March, Ontario set a maximum fee rate of $ 21 per $ 100 borrowed, making what was presumed to be an illegal practice legal, Strosberg said.
“It is a political decision that the government made, and the government having made that decision, I cannot say that it is illegal that people should not take advantage of it, which is why credits have become an option. where they would not have been an option before, we could never have talked about settling the matter with credits when it is illegal, “he said.
The class action lawsuit, which demanded $ 224 million plus interest, alleged that the financial services company charged “illegal” interest rates on 4.5 million short-term loans from 1997 to 2007. The lawsuit said that borrowers had paid an average of $ 850 in loan fees.
The case went to Toronto in April, but was adjourned with two weeks remaining after the two sides agreed to mediation with former Supreme Court justice Frank Iacobucci, Strosberg said.
Strosberg said there was a “convenience” to reaching a settlement as Money Mart owes $ 320 million (US) on secured debt.
Ontario Superior Court Judge Paul Perell will review the settlement and if he doesn’t approve it, “we’re back in the saddle,” Strosberg said.
Back in Windsor, Oriet relished the apparent victory, remembering how the Money Mart store seemed to be a savior as it could walk out with cash in hand.
“But then you are in a vicious trap, a vicious cycle,” he said. “Your next paycheck is down that amount of money, so you almost have to put your ass back in there for another.”
Joe Doucet, 41, and his wife, Kim Elliott, 40, also fell victim to the lure of easy payday loans when Doucet was fired as a factory worker. “We had up to five payday loans at the same time. The problem was that the weekly interest ended up being $ 300 or $ 400.”