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SCARFONE HAWKINS

CLASSACTIONLAW.CA: INFORMATION CONCERNING ACTIVE LAWSUITS


Cash Store Inc. Payday Loans

 

 

Our claim against the Cash Store Inc. is settled and administration of the settlement is virtually complete. 

 

Claim forms and refunds were organized by the office you sent them to:

 

The Cash Store Financial.

P.O. Box 566 12222-137 Avenue

Edmonton, AB

T5L 4X5

 

1-866-506-5035

 

If you have any questions with respect to the settlement you received, change of address, etc. you need to follow-up with the Cash Store directly.

 

 

Recent Developments

Class member claims forms had to be filed on or before June 30, 2009.

 

Claim forms were required to be submitted as follows:

By mail to:

The Cash Store Financial
P.O. Box 566 12222-137 Avenue
Edmonton, Alberta
T5L 4X5

or by Fax to:

1-780-452-4670

Claims filed after June 30, 2009 will not be allowed. 

 

The defendant is now processing all claims received.

 

Each class member having submitted a valid claim will be paid his/her pro rata share of the settlement fund on the basis of the percentage that the brokerage fees charged to the class member are of the total amount of brokerage fees charged to all class members.  Payments will be made half in cash and half by vouchers.  Credit vouchers are fully transferable and have no expiry date. 

 

It is expected that payment out to class members will take place within the next several months and no later than Fall, 2009. 

 

 

The Settlement

 

This claim has been settled and the settlement has been approved by the Court.

 

The plaintiff, Thompson McCutcheon, commenced action under the Class Proceedings Act, 1992, on behalf of any person in Canada, resident outside the Provinces of British Columbia and Alberta, who borrowed money as a “payday loan” from a Cash Store location, and who repaid the loan and the standard broker fee charged by The Cash Store (22.54% of the loan amount to March 11, 2004; 25% of the loan amount after March 11, 2004) on or after the due date of the loan.

 

There are separate lawsuits in British Columbia and Alberta, which are ongoing.

 

Under the terms of the settlement, the defendants are to pay all customers of The Cash Store Inc. and Instaloans, outside British Columbia and Alberta, who were advance funds under a loan agreement and who repaid the payday loan plus the brokerage fee and interest in full (the “Class”), $1.5 million in cash and $1.5 million in credit vouchers, to be distributed pursuant to a Court approved Distribution Plan.

 

The defendants have also agreed that they will prepare and distribute to their customers through their retail locations, specific written credit counseling materials promoting responsible financial habits/practices. The defendants will spend at least $50,000.00 in connection with preparation and distribution of such materials.

 

Click here to read the Judgment of Mr. Justice Cullity

Click here to read the Endorsement of Mr. Justice Cullity

Click here to read the Distribution Plan

Click here to read the Post-Approval Notice

 

OVERVIEW OF CLAIM

A Statement of Claim was issued in the Ontario Superior Court of Justice on April 13, 2004 against The Cash Store Inc. and Rentcash Inc. alleging that interest and fees charged in respect of payday loans are illegal pursuant to the Criminal Code of Canada, that the cost of borrowing is excessive and that the transactions are harsh and unconscionable.

The action is brought under the Class Proceedings Act, 1992, on behalf of a Class consisting of any person in Canada, outside the Provinces of Alberta and British Columbia, who obtained a payday loan advances from the defendants and who were charged the defendants standard broker’s fees (22.54% if the principal amount of the loan up to March 11, 2004; 25% after March 11, 2004).

A separate action has been brought in Alberta and in British Columbia.

The Statement of Claim alleges that the defendants own and operate 101 Cash Stores across Canada with locations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

Payday loans are generally for a short period of no more than 14 days and are usually due and payable on the next scheduled payday of the customer.

Advances are typically made up to 33% of the borrower’s net take-home pay.

Interest is charged on all loans at an effective annual rate of interest of 59%, exclusive of all other charges. In addition to payment of interest, however, customers are also charged a “broker’s fee” of approximately 22.5% of the amount of the loan advance, which fee is a lump sum charge levied at the time of the loan transaction.

When combined with the annual rate of interest of 59%, the broker’s fee increases the cost of borrowing to in excess of 1200% on loans of 7 days, more than 600% on loans of 14 days and more than 300% on loans of 30 days, without any compounding.

The Statement of Claim alleges contravention of the Criminal Code of Canada in that the amounts charged, collected and received by the defendants constitutes criminal interest which exceeds 60%, the maximum interest rate allowed by law.

The Statement of Claim also alleges that the cost of the loans is excessive and that the transactions are harsh and unconscionable. A request is made that all customers are entitled to repayment to the extent of any excess paid or charged.

The action also alleges a breach of the provisions of the Consumer Protection Act. The claim alleges that the defendants have failed to properly disclose the cost of borrowing in respect of the said payday loans.

The certification motion was argued in Toronto before Justice Cullity on April 18, 2006. He issued his decision on May 10, 2006.

The decision is favourable and certifies the claim as a class proceeding as against The Cash Store Inc.

The claim has been certified on the basis of the following class definition:

Any person in Canada, resident outside the Provinces of British Columbia and Alberta, who borrowed money as a ‘payday loan’ from a Cash Store location, and who repaid the loan and the standard broker fee charged by the Cash Store (22.54% of the loan amount to March 11, 2004; 25 per cent of the loan amount after March 11, 2004) on or after the due date of the loan.

Thompson McCutcheon has been appointed as representative plaintiff for the class.

The Cash Store Inc. has served a Notice of Motion for Leave to Appeal the Decision of The Honourable Mr. Justice Cullity. The Appeal had been scheduled to be heard in Fall, 2006, but has been adjourned a number of times and has not yet been heard.

Press Releases

Click here to read the Press Release regarding the Statement of Claim

Click here to read the Press Release regarding Certification

Click here to read the Decision of Mr. Justice Cullity

News Articles

Click Here to Read the Star Article April 22, 2008 - Payday loan clients to share $3M settlement

Click Here to Read the Hamilton Spectator Article April 23, 2008 - Hamilton lawsuit nets $3m payday loan settlement


Court Documents

Click here to read the Statement of Claim


CONTACT US

If you would like more information regarding this claim or wish to be added to our database of claimants, you may e-mail us at: .

 

Due to the volume of inquiries, please allow one week for a response.

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