Cash Store ordered to pay $1M for illegal payday loans
Company charged customers exorbitant interest rates on predatory payday loans
The Cash Store, which also operates as Instaloans, has been ordered to repay more than $1 million to B.C. customers who were charged exorbitant interest rates on payday loans.
One of those customers was John Rahberger, a man on a disability pension, who went to the Cash Store two years ago for a payday loan. Rahberger got into a vicious cycle of borrowing — two loans a month, every month.
"I was stuck. They had me over a barrel," said Rahberger.
Now he and others like him, who in total took out 68,000 payday loans between November 2009 and March 2012, are in for a refund.
I'm hoping they realize enough is enough and they can't do this to people anymore.- John Rahberger
Consumer Protection B.C. has ordered the Cash Store to repay them $1 million. That's because B.C. regulations prohibit payday lenders from charging more than 23 per cent interest per month.
Between November 2009 and March 2012, however, Cash Store Financial Group — which operates Cash Stores and Instaloans in B.C. — was doing just that. It was charging customers extra to load the loans onto debit cards, before cashing them.
A CBC News investigation at the time found one customer paying approximately 35 per cent a month.
Consumer Protection B.C. fought the Cash Store all the way to B.C. Supreme Court to force the company to pay back the money.
The Cash Store lost.
"Consumers have waited long enough, and it's time for Cash Store to refund their money," said Manjit Bains of Consumer Protection B.C.
Before the legal battle, Cash Store Financial was ordered to place $1 million into a trust account. It's that money that will be used to repay the overcharged customers.
If the Cash Store is unable to find all of the overcharged customers, Consumer Protection B.C. will take over the search.
"We want the $1 million that the cash store owes back in the pockets of British Columbian consumers," said Bains.
Rahberger said he is "ecstatic" with the outcome.
"It makes me feel kind of vindicated, really," he said.
"I'm hoping they realize enough is enough and they can't do this to people anymore."
Cash Store told CBC News on Friday it is disappointed with the decision and is considering its options. The payday lender has 30 days to appeal the ruling.
With files from the CBC's Eric Rankin