Nova Scotia

Unregistered payday lenders bullying borrowers strapped for cash during pandemic

Credit counsellor John Eisner said aggressive collection tactics employed by some online loan services are against regulations in all Canadian provinces. The problem, however, is enforcing those regulations when online lenders operate without regard to provincial borders. 

Borrowers face aggressive collection tactics like insults and harassment

John Eisner is president and CEO of Credit Counselling Services of Atlantic Canada. (Submitted by John Eisner)

The pandemic economy is forcing some Nova Scotians to turn to unregistered payday lenders online who resort to harassment, intimidation and name-calling when customers fall behind on payments, says a credit counsellor.

John Eisner, president and CEO of Credit Counselling Services of Atlantic Canada, said most of his recent clients are struggling with short-term loans from online lenders.

The loans average between $800 and $900, he said, with most people borrowing from different companies. 

"When you're desperate, people will take the money. It's easy to access," said Eisner.

Insults and harassment

Eisner said aggressive collection tactics employed by some online loan services are against regulations in all Canadian provinces. The problem, however, is enforcing those regulations when online lenders operate without regard to provincial borders. 

Eisner provided CBC news with a copy of an email exchange between one of his credit counselling clients and an online payday loan service, with identifying details removed.

"Today we start with references you piece of shit ... Now we start calling your sister and every other reference they have and all the references in the system," a representative for the lender wrote in an email from Nov. 30, 2020.

"It's terrible, the language is coming out of them," Eisner said. "We've got one client right now, they're in jeopardy of losing their job because this company will not stop calling the employer."

Regulatory limbo

Out of 20 online loan companies Eisner has researched in the past three months, 16 were not registered to operate in Nova Scotia.  

For most of the others, he couldn't find provincial registration in any Canadian jurisdiction.

"There were a few of them that indicated they were licensed in Quebec. We went checking them out there, and they're not even licensed in Quebec," he said. "So that's problematic."

Government has limited authority

A spokesperson for Service Nova Scotia, the department that regulates payday loans, said their authority to act is limited when a lender is not provincially licensed.

But Tracy Barron noted there is legislation in Nova Scotia that protects borrowers and their families from harassment, and prohibits contacting an employer. 

"A consumer could seek legal advice on a lender's obligations under the Consumer Creditor's Conduct Act or contact police," Barron said.

Cpl. Chris Marshall, a spokesperson for the RCMP in Nova Scotia, said there have been no public complaints about payday loans in 2021, but he encouraged complainants to come forward with concerns.

"While not all communications rise to the level of harassment, it is best to at the very least contact police and discuss the specific situation with an officer," Marshall said in an emailed statement.

Eisner said the fastest way to check a registration in Nova Scotia is with a free online search at the Registry of Joint Stock Companies.

Interest-free loophole

He advises consumers to avoid payday loans because of "astronomical interest rates."

But he shared a valuable tip for payday loan borrowers who deal with an unregistered online lender: legally, you don't have to pay them any interest. 

"Because of the fact that they're not registered in the province of Nova Scotia, you're only obligated to pay back the principle," he said. 

Eisner cautioned that the law won't keep online lenders from hunting borrowers down. Although he's never referred a client facing harassment to police, he said he'll consider doing so in the future.

"When they're harassing you, and your family members, and references and your employer, and yet the province of Nova Scotia can't do anything about it, it's a problem," he said.

ABOUT THE AUTHOR

Jack Julian

Reporter

Jack Julian joined CBC Nova Scotia as an arts reporter in 1997. His news career began on the morning of Sept. 3, 1998 following the crash of Swissair 111. He is now a data journalist in Halifax, and you can reach him at (902) 456-9180, by email at jack.julian@cbc.ca or follow him on Twitter @jackjulian

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