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About our presenter… Margaret Capes, B.A. (Hons.), LL.B., M.Ad.Ed, is Legal Education Coordinator of Community Law School (Sarnia- Lambton) Inc. She also acts as Review Counsel for Community Legal Services, as an adjunct professor in the clinical law program, and as faculty advisor for Pro Bono Students Canada and the Dispute Resolution Centre, all at the Faculty of Law, University of Western Ontario. She is the former Executive Director of Community Legal Assistance Sarnia.

Hot Topics in Consumer Protection: Pay Day Loans

2010, Community Law School (Sarnia-Lambton) Inc. 4 Webinar Overview 1.What is a pay day loan? 2.What laws apply to pay day loans? 3.Consumer protections under the Pay Day Loans Act, 2008: False or misleading statements prohibited; Information posters required; Cost of borrowing disclosed; Written contract required; Cooling-off period applies; Prepayment, deductions, rollovers regulated; Collection practices. 4.Consumer Remedies 5.Questions

2010, Community Law School (Sarnia-Lambton) Inc. 5 What Is a Pay Day Loan? Pay day lenders: The banker of last resort for many people Essentially an advance on a paycheque, benefits cheque, or other anticipated funds Notorious for unconscionable interest rates and other fees As of 2009 there were 1,350 pay day lenders in Canada, 700 in Ontario alone

2010, Community Law School (Sarnia-Lambton) Inc. 6 Laws Governing Pay Day Loans  Federal law: the Criminal Code At one time, the sole law addressing pay day lender abuses Interest caps and other provisions flouted by lenders Amended to permit provincial regulation  Ontario’s Pay Day Loans Act, 2008 (PDLA) Pay day lenders must be licensed; Sets licensing requirements; Creates numerous operating requirements and resrtictions designed to give consumers a measure of protection against predatory practices

2010, Community Law School (Sarnia-Lambton) Inc. 7 Consumer Protections Under the PDLA  False, misleading, or deceptive information is prohibited in any form.  All offices must display a poster that lists maximum interest permitted by law, and the rate charged by the pay day lender.  Pay day lenders may not push other services.  The total cost of the borrowing must be clear.  A written contract is required, and it must: Clearly show all details of the loan agreement; Be dated and signed by both borrower and lender; Give the name and address of the borrower, and the legal name of the lender; Include information about any device (such as a cheque card) that the lender uses for tender of the loan amount; Identify the ways in which the loan may be repaid; Set out statutory information about the borrower’s right to cancel, and refund rights under the PDLA; Tell the borrower how to contact the Registrar under the PDLA, and list the website address for the Ministry of Consumer Services.

2010, Community Law School (Sarnia-Lambton) Inc. 8 Consumer Protections Under the PDLA, cont.  Mandatory cooling-off period for the borrower (2 business days).  No deductions from the loan are permitted.  Loan advance must be delivered immediately upon signing.  Prepayment must be allowed.  Rollovers are prohibited.  Collection practices are restricted: Time for telephone calls is limited; Number of contacts are limited; Lender may not publish or threaten to publish borrower’s name; Threatening, profane, intimidating, or coercive language is prohibited; Cost of communication may not be charged to the borrower; May not communicate in a manner or with a frequency that constitutes harassment.

2010, Community Law School (Sarnia-Lambton) Inc. 9 Consumer Remedies  Complaint to the PDLA Registrar: Broad investigatory powers; May mediate between the parties; May issue written warning, refuse to renew lender’s license, or order fines.  Request Ministry to prosecute under the PDLA: Individual penalties of up to $50,000, and/or two years imprisonment; Corporate penalties of up to $250,000.  Civil court action: Superior or Small Claims Court; Two-year limitation period.

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