Police payday loan probe spans at least 3 years

Police were probing potentially-criminal payday loan rates in Newfoundland and Labrador as far back as three years ago, CBC Investigates has learned.

The Royal Newfoundland Constabulary and Royal Canadian Mounted Police issued a press release late Monday afternoon confirming that the investigation has wrapped up.

That advisory, sent to all media outlets, came after days of questions from the CBC.

“The results of this investigation will be forwarded to public prosecutions,” a joint RNC-RCMP statement noted.

“No further comments will be made at this time.”

The results of this investigation will be forwarded to public prosecutions. No further comments will be made at this time.- RNC-RCMP statement

There is a lack of provincial regulation into the payday loan industry in Newfoundland and Labrador.

While the minister responsible for protecting consumers says that lack of regulation is to keep rates low, CBC Investigates found that is not the case.

Other provinces limit the amount payday lenders can charge.

In Manitoba, for example, the maximum is $17 for every $100 borrowed. In Nova Scotia it's $25.

There are no provincial rules in Newfoundland and Labrador, so the federal rules apply – 60 per cent interest annually.

But in Newfoundland and Labrador, that's not happening.

The Cash Store charges almost $30 dollars for every $100 borrowed over a two-week period.

That’s the highest anywhere in the country for the company, and works out to an annual interest rate of 778 per cent.

A Cash Store spokesperson contacted by CBC Investigates declined to do interviews, but said the company abides by all laws.

‘That is a matter for police’ 

“I'd suggest to you the maximum they're allowed to charge is 60 per cent,” Service NL Minister Dan Crummell told CBC Investigates. 

“If they're charging 778 per cent I suggest to you they could be in violation of the criminal code … and could be facing criminal charges.”

No provincial rules means no provincial responsibility, according to Crummell.

“That is a matter for the police, if we get any calls at all about payday loan companies we refer them to the police,” he said.

The police have investigated.

Back in 2010 lawyer Ches Crosbie won a class-action lawsuit against payday loan companies.

After that, he says, the police came to him looking for evidence to build a case.

Crosbie hasn't heard anything since.

“They're kind of blatantly doing what they've been doing all along and they're getting away scot free it would seem,” Crosbie said.

The Opposition Liberals say the lack of provincial regulations isn't working.

They want licences and limits for payday loans.

“The province can't speak out of both sides of their mouth,” Liberal MHA Tom Osborne said.

“They've either got to step in and regulate, which is my preference because some individuals need these companies, or they've got to step in and shut them down.”

Even the Canadian Payday Loan association wants regulations.

That class-action suit a few years back cost Money Mart $5 million.

The company doesn't offer payday loans here anymore because there are no regulations.

‘Lower end of the income scale’ 

Credit counsellor Al Antle has dealt with thousands of people who've turned to payday loan companies.

“The vast majority of the people we're dealing with are probably at the lower end of the income scale,” Antle said.

“However more and more and more we're seeing lower middle class families strapped for several days over several weeks for a modest amount of cash take advantage for these services.”