Are you in Ontario? Did you recently take out a payday loan? Were you a customer of the now-defunct Cash Store or Instaloans? Well, you could receive a share of a multi-million-dollar class action settlement.
It was announced Monday that more than 100,000 bad credit loan borrowers in Ontario could receive a share of a $10 million class action settlement. Ontarian consumers who took out next day loans after September 2011 are being requested to file claims to recover some of the illegal fees and interest they were charged.
The lawsuit, which was filed on behalf of Timothy Yeoman, claims that Cash Store Financial Services violated the Payday Loans Act by charging more than the maximum cost of borrowing permitted. In the province of Ontario, payday loan stores banned from charging more than $21 for every $100 borrowed.
Cash Store allegedly avoided the rules regarding maximum interest rates by adding extra fees for establishing products for bank accounts and debit cards. The company maintained more than 500 outlets across the province.
“We’ve made it as easy as possible for people to get their money back, but the challenge is to ensure borrowers come forward and file claims for their share of the settlement money,” said Jon Foreman, partner at Harrison Pensa LLP, legal counsel to the class members in the case, in a statement. “If you took a payday loan from these businesses after September 1, 2011 in Ontario, we want to hear from you.” – (PR)
As soon as payday loan borrowers have their claims approved they will be eligible to receive a minimum of $50. The final amounts may depend on how many claims are submitted to the courts – some claimants could receive more money based on how many loans they took out. The claims period will be open until October 31, 2016.
What happens if borrowers don’t have the necessary loan documents? According to the news release, the lawyers have set up a process for previous customers to determine if they’re eligible. Some documents or other sources of information would only be necessary in specific circumstances.
“Considerable efforts have been made to reach the more than 100,000 claimants that are entitled to this compensation and we’re confident the great majority will be able to obtain what’s rightfully theirs,” Foreman states.
The claims period will be open until October 31, 2016.
The lawsuit was initially filed in 2012 for Yeoman. When he borrowed $400 for nine days, he was charged $68.60 in fees and service charges and another $78.72 in interest. His total borrowing costs for the principal amount was $147.32.
In 2014, Cash Store and its directors filed for bankruptcy protection, which made things a lot more difficult because it’s harder for the business to gather up enough funds to pay out the $10 million. The attorneys argue that the sum could have been much higher if the firm had remained solvent.
“When you have a company like the Cash Store that literally declares insolvency once the litigation gets to a more mature stage, it’s a terrible situation for the case,” he told the Toronto Star. “To scrounge $10 million out of the circumstances that we had was a victory in itself.”
In the end, Foreman and his team believe there are other payday loan operators who are breaking the laws currently in place for the payday loan industry.