When Kristina Dettling of Fort St. John, B.C., found herself short on cash she did what she had done before: She took out a payday loan.
image: Small Business CEO
This time, instead of going to a brick-and-mortar store, she went online to speedypayloans.ca. What she didn't know was that such online payday leaders are unlicensed and illegal in Canada.
Unlike licensed payday lenders in B.C., online payday lenders drastically understate the interest rate they were charging, set up loan terms far longer than the maximum allowed for, and prompt borrowers to roll over their high-interest loans, as uncovered in an investigative report by the Globe and Mail (May 29, 2023).
When Dettling took out her first $750 from the online lender, her plan was to pay it off in full, as she had done before when borrowing in person from traditional, licensed payday lenders. But when she was one instalment away from having repaid the full amount, she received an e-mail prompt to renew the loan and went for it.
Speedy Pay Loans claimed it was charging a 32-per-cent annual interest rate. However, the actual annual rate was between 305 per cent and 461 per cent depending on how the interest was calculated contrary to the Criminal Code.
No wonder Dettling was deceived: Speedy Pay Loans' website looks very similar to that of many other registered payday lenders but does not display any provincial licences.
Her problems multiplied after Speedy Pay Loans offered more loans, rolling them over and charging exorbitant interest fees.
That's when Dettling filed a consumer proposal with MNP Ltd. A consumer proposal is a negotiation of what a borrower owes through a Licensed Insolvency Trustee like MNP.
That was the start of the threats, the insults and the round-the-clock badgering of Dettling began. Illegal lenders, or the collection agencies they engage, harass borrowers, their family members and their employers with constant phone calls, verbal threats and public shaming.
Where the lenders are actually based remains a mystery. In their terms of use Speedy Pay Loans and another, Cash2Go, say they operate from Quebec. But in a loan contract sent to Dettling, Speedy Pay Loans used the address for an office suite in a Regina office tower.
That address in Regina belongs to MNP –the Licensed Insolvency Trustee. An MNP receptionist confirmed that the firm had inexplicably been receiving mail addressed to Speedy Pay Loans for years.
Cash2Go lists an address for a unit in the Southcentre Executive Tower in Calgary. The Globe visited the address, a beige building that houses law offices, a dentist, relators and a jewellery store. No Cash2Go. A boutique software company had leased the space for three years and has never heard of Cash2Go or Speedy Pay Loans.
Worse still, Canadians are sending sensitive information to sources they can't track. As the websites now have the consumer's personal or banking information details, there is the possibility that they may sell this information to scammers, or even sign them up for services without their consent.
Legitimate payday lenders in B.C. are allowed to offer loans online -but borrower beware. Most of these sites are not what they appear to be.
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