Wednesday, December 21, 2011

Caution with Pay-Day Loans

December 21, 2011


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Payday Loans With Excessive Rates Being Offered Over Internet Without a Licence
The Manitoba Consumer Protection Office is cautioning consumers to beware of Internet payday loans that cost more than the allowable rate under Manitoba’s Consumer Protection Act and regulations.
Manitoba law requires that all payday lenders offering, arranging or providing payday loans to Manitobans be licensed by the Consumer Protection Office and comply with the Manitoba regulatory framework.  This includes payday lenders who offer loans to Manitobans over the Internet, regardless of where their head offices are located.
Manitoba law limits the maximum fees that can be charged for a payday loan to $17 per $100 borrowed.  If someone charges more than the maximum allowable fees for a payday loan, the law excuses the borrower from paying the fees and requires the payday lender, on request by the borrower or the Consumer Protection Office’s Director, to reimburse the borrower for fees already paid.  This is in addition to other measures under the act for dealing with payday lenders who do not follow the law.
It has come to the Consumer Protection Office’s attention that not all Internet payday lenders who offer loans to Manitobans are licensed under the act.  Also, some Manitobans have been charged rates that exceed $17 per $100 borrowed for a payday loan obtained over the Internet. 
Manitoba consumers are urged to exercise caution with respect to Internet payday loans including Internet loans they can get through computers set up in licensed payday lending stores or other retail outlets.  In addition to being aware of the maximum fees payday lenders can charge, consumers are reminded that:
  • payday loans can be cancelled within 48 hours without paying any charges;
  • payday lenders can’t require repayment of a loan before the borrower’s next payday;
  • payday loan agreements must list all charges and the terms of the loan; and
  • borrowers cannot be required to buy prepaid credit cards, insurance or other options that may be offered. 
Consumers taking out payday loans should ask questions about anything they do not understand and should not sign any documents or agree to Internet loan conditions that are not clear.
Last fall, the Manitoba government implemented the most stringent payday lending rules in Canada to ensure that consumers are protected from high interest rates and unfair business practices.

Consumers who believe that they may have received payday loans that do not comply with Manitoba’s legislation are urged to contact the Consumer Protection Office at 204-945-3800 or 1‑800‑782-0067 (toll-free).
Manitoba’s payday lending regulations are part of Let’s Make a Better Deal, Manitoba’s five-year consumer protection strategy.
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