Ontario Government Threatens To Revoke Cash Store Financial Service’s License
In recent weeks, Ontario’s government revealed that it plans to take away Cash Store Financial Services’ license to issue payday loans in Ontario for allegedly violating Ontario’s Payday Loans Act. The act was created to limit the fees that payday lenders are allowed to charge. Since Cash Store Financial Services is one of Canada’s largest cash advance companies, this is big news for residents everywhere. If the company loses its license, many citizens with imperfect credit who rely on payday loans will find it more difficult to obtain the money they need.
In Ontario alone, Cash Store Financial Services has over 200 outlets in 19 different communities including Ottawa, Toronto, and Kitchener. The Cash Store and InstaLoans are the two main branch names used by this company. According to the Ministry of Consumer Services of Ontario, Cash Store Financial Services is accused of charging customers higher fees than permitted. By law, the maximum amount a payday lender can charge is $21 per $100 borrowed. In addition to this, the ministry alleges that several customers were required to receive their borrowed funds in the form of prepaid debit cards instead of cash. Customers reported that they had to spend as much as $18 to activate the cards. In addition to this, they reported paying monthly maintenance fees for the prepaid cards and additional fees for adding more funds to their cards. These fees were in addition to the maximum $21 per $100 allowed by law.
To remedy these alleged offenses, the ministry is requesting that the company’s license be removed by a tribunal. In response to the allegations, Cash Store Financial Services requested a hearing. The company also said that it has stopped offering cash advances to the public in Ontario, so Cash Store Financial Services plans to continue its other services. In addition to this, the company claimed that Ontario’s government has made efforts to hinder lending activities and other services in the past.
In 2008, the Payday Loans Act was introduced to stop companies from taking advantage of the working poor. However, experts believe that it is time to revisit that act and make additional changes. They agree that the current maximum fee, which adds up to triple-digit percentages when spread over the course of one year, is unfair. At this point, their goal is to make an example for other payday lenders and negotiate more reasonable rates to protect Canadian consumers in the future.