B.C.’s consumer protection watchdog has ordered a payday lender with a Smithers location to repay millions in illegal fees.
By charging for cash cards, Cash Store Financial Inc. was found to have exceeded the 23 per cent maximum charge for a loan lasting two months or less.
Spokesperson for The Cash Store, Michael Thompson, said the company may try to appeal the order, which came from Consumer Protection B.C.
“We won’t be issuing any refunds immediately,” Thompson said.
“We disagreed with their conclusion that our company is the issuer of cash cards.”
Payday lenders are allowed to charge fees for cash cards, which allow their customers to cash loans at ATMs or retail stores.
But under B.C. law, that fee has to be included in the total cost of a loan, and the total cost of Cash Store loans was exceeding the 23 per cent maximum.
Consumer Protection B.C. first ordered Cash Store to refund its customers in November 2010.
The Cash Store asked the agency to reconsider the order and it did so, upholding the original decision on March 23.
“We work very closely with businesses to make sure they understand the law and their obligations,” Manjit Bains, the agency’s director of corporate affairs said.
Bains said The Cash Store has exhausted its options under the Business Practices and Consumer Protection Act and has 90 days to refund customers for all cash card fees dating from Nov. 1, 2009 to March 23, 2012.
Because B.C.’s payday lending law only came on the books in 2009, Bains said Consumer Protection B.C. spent about a year doing outreach with payday lenders to explain it.
Under the law, payday lenders such as The Cash Store can loan customers up to $1,500 for a period no longer than 62 days, and there are restrictions on multiple and serial loans.
“In most cases, loans are for under 62 days, usually to help customers get to the next paycheque,” said Bains.
Across B.C., people who use payday lenders borrow an average of $280 and repay it in less than two weeks.