Trial for Class-Action Lawsuit Against Canada Payday Loan Company Begins

Money Mart mounts defense

A class-action lawsuit that was filed in Ontario went to trial Tuesday. The suit against Canada payday loan company Money Mart alleges that the defendant charged an unlawful amount of interest to its customers.

Money Mart maintains that it did not charge illegal interest or interest rates of any kind, as its services are fee-based.

Payday loan lawsuit details

The lawsuit seeks a total of $224 million plus interest for 264,000 plaintiffs. These plaintiffs include customers who got short-term loans, cash advances or payday loans from Money Mart between Aug. 19, 1997, and Sept. 9, 2007.

TheStar.com reports:

The class action lawsuit alleges Money Mart and its U.S. parent company, Dollar Financial Group Inc., breached section 347 of the Criminal Code by charging and collecting fees and interest at an effective annual interest rate in excess of 60 percent on its so-called payday loans.

Lawyer’s rebuttal

Money Mart’s lawyer Paul Morrison explained in court that if the plaintiffs had paid back their short-term loans on or before the previously negotiated dates, they would have avoided additional fees.

The fees charged for payday loans do not constitute interest, Morrison contested, and thus the company is not in violation of the criminal code. Just as fees charged on other financial transactions, such as check cashing and NSF fees from banks, are not interest charges, neither are the charges on payday loans. ... click here to read the rest of the article titled "Trial for Class-Action Lawsuit Against Canada Payday Loan Company Begins"