Payday Loan Penalties and Reimbursements in Canada
The payday lending industry is a profitable industry but there are very few rules that can control their practices. Although payday loans can greatly help people who are in need, some payday loan lenders take advantage of borrowers by tricking them into rolling over loans and using threats to get their money. That is why Canada is starting to lay down the law when it comes to poor payday lending practices. The Canadian government is seeking to end these fraudulent payday loan practices by making companies pay penalties and to even reimburse customers who were wrongfully charged. These penalties have added up to more than tens of thousands of dollars.
Two examples of payday lenders who were made to make amends were the Cash Store Financial Services Inc and Instaloan. Each company was made to pay $25,000 which included restitution and reimbursing any costs for the investigation made by the Consumer Protection BC. The Consumer Protection BC works similarly to the US Federal Trade Commission which overlooks payday lending and enforces payday lending laws in Canada. There were numerous complaints coming from these two payday loan lenders which sparked the investigation.
Canada has been trying to fix the payday lending laws over the past few years. There have been some great advances such as the mandatory licensing of all payday lenders working in Canada. Payday loan interest fees cannot exceed 23 percent of the loan amount and they must give customers multiple options in order to receive their payday loan money. These Canadian payday loan laws are means to help consumers from falling into payday loan debt and trouble with fraudulent payday loan companies and practices.
