Winnipeg Free Press - PRINT EDITION

Woman targets payday lending firms with lawsuit

Cash Store, Instaloans named

  • Print

A Winnipeg woman has initiated a class-action suit against the payday loan industry, alleging two local operators are charging more than the law allows.

The woman named The Cash Store and Instaloans in a suit recently filed at Court of Queen's Bench, alleging they are charging more in interest than the province permits under new rules introduced in 2010.

The suit alleges the firms are violating the Manitoba Consumer Protection Act and PayDay Loans Act and regulations, inflating the cost of borrowing by forcing customers to buy cash or debit cards to access their loans through an ATM operator.

The allegations have not been proven in court and the court action has not been accepted yet as a class-action lawsuit. Statements of defence have not been filed.

Manitoba brought in regulations in October 2010 that limit the cost of credit for payday loans to 17 per cent of the principal advanced. The suit alleges the payday firms changed their practices to evade the regulations so they could charge customers higher fees.

"The Cash Store has been using these cash card fees to evade (provincial) regulations which limit them to 17 per cent," Vancouver lawyer Paul Bennett said.

The suit alleges Cash Store and Instaloans, with the addition of extra fees, is imposing loan costs of 23 per cent, in violation of Manitoba law.

Bennett said when the extra fees are added in, the cost of the loan is the equivalent of 50 per cent of the principal.

Other firms named in the suit are: Loansalberta Inc., Assistive Financial Corp., and DirectCash Payments Inc.

The class action is asking the courts to order the firms to repay the Winnipeg woman and others in the suit for the borrowing costs they incurred in taking out the payday loans and for the court to award unspecified damages for the firms participating in a conspiracy to overcharge its customers.

If the court approves the class action, anyone in Manitoba who borrowed money from the payday firms will automatically be included in the suit and entitled to a portion of a settlement.

"They don't have to do anything to join," Bennett said. "That will be clear from the (payday firms') records."

The Cash Store and Instaloans are both owned by an Edmonton firm, Cash Store Financial Services Inc., which also operates an Internet-based payday loan firm, Loansalberta Inc.

The suit also alleges Cash Store and Instaloan used the Internet payday firm, Loansalberta, which is not registered in Manitoba and was set up after October 2010, to evade provincial regulations that prohibit the firms from lending money until an active loan is repaid, and making a subsequent loan within five days of a previous loan being paid off.

Bennett said his firm has initiated similar class-action suits against Cash Store and Instaloans, requiring customers to buy cash or debit cards, in B.C., Alberta and Saskatchewan.


Laws affecting payday loans


Criminal Code of Canada:


IT is illegal to charge an interest rate in excess of 60 per cent.


Consumer Protection Act of Manitoba


Venders are prohibited from:

-- Advancing a loan to a borrower who hasn't paid off a previous payday loan

-- Withholding from the loan any cost of credit

-- Making the loan contingent on the borrower purchasing another product or service


Payday Loans Act of Manitoba


The cost of credit for a payday loan is restricted to 17 per cent of the value of the principal advanced.

Subsequent loans made within seven days after the borrower has repaid the first loan, are restricted to five per cent interest.



How payday loan firms are getting around the 17 per cent maximum interest on loans


$160 -- Amount borrower needs

$217.53 -- Amount payday lender requires to be borrowed

$254.16 -- Total cost, if repaid within 160 days


Borrowing costs include:

$48 -- cash/debit card fee

$9.23 -- loan insurance

$36.93 -- loan fee (interest amount)


Republished from the Winnipeg Free Press print edition November 15, 2012 B2


Updated on Thursday, November 15, 2012 at 12:12 PM CST: rewords headline

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Total Body Tune-Up: Farmer's Carry

View more like this

Photo Store Gallery

  • MIKE DEAL / WINNIPEG FREE PRESS 060711 Chris Pedersen breeds Monarch butterflies in his back yard in East Selkirk watching as it transforms from the Larva or caterpillar through the Chrysalis stage to an adult Monarch. Here an adult Monarch within an hour of it emerging from the Chrysalis which can be seen underneath it.
  • A Canada Goose cools off in a water pond Monday afternoon at Brookside Cemetary- See Bryksa’s Goose a day Challenge– Day 27-June 25, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos


Do you agree with the sale of the Canadian Wheat Board to foreign companies?

View Results

View Related Story

Ads by Google