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 advance in Maines or payday loans in Maine 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 in Maine.
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 in Maine 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 in Maine.
“We say check-cashing fees and item fees are not payable for advancing of credit so do not fall under the definition of interest under 347,” Morrison said.
Plaintiff assassinates own character?
TheStar.com reports that part of the plaintiffs’ case is built on its reputation. The claim filed by lawyers on behalf of the plaintiffs paints quite the negative picture of the people its representing.
The plaintiffs are portrayed as poor, uneducated borrowers who Money Mart took advantage of through payday loan fees.
Company statistics
Company executives and authors of public-opinion surveys will testify during the trial that the plaintiffs are not the backward folk their lawyers are representing.
Money Mart presented survey data in court that showed more than half its customers have completed post-secondary education. Furthermore, less than 42 percent of Money Mart’s customers make less than $50,000 per year. That’s about on par with average income for the province.
Money Mart’s data also showed that the average age of a payday loan customer is 39.
No quick fix
Ontario Superior Court Justice Nancy Spies, who will preside over the trial for the duration, expects the trial to last about six weeks.
