From ring toss to loan shops

Earlier this year, Voisin, Stop ‘N’ Cash and the owners of each of its 59 Ontario franchises were named as defendants in a proposed class-action lawsuit launched by a former customer who alleges the business charges criminal interest rates on payday loans.

The Toronto Star
June 20, 2004

From ring toss to loan shops
Ex-carnival worker built an empire. Payday lender faces class-action suit.
Jim Rankin and Nicole MacIntyre

Bright yellow PT Cruisers and a Mini Cooper — emblazoned with green Stop ‘N’ Cash logos and a promise of "hassle free cash" — come and go at the Kitchener strip-mall headquarters of the fastest growing chain of payday loan stores in Ontario.

The company's trademark vehicles are driven by some of those who have bought into the Stop ‘N’ Cash family, a 60-plus-store empire. All day long, like bees to the hive, the franchisees come and go, in the bright yellow cars.

Tim Voisin wheels his jet-black Lexus LX470 SUV into the parking lot, a short drive from his newly built home atop a hill. Voisin is the queen bee of Stop ‘N’ Cash. With a full head of graying hair and wearing a golf shirt, he could pass for a younger, trimmer, shorter Bill Clinton.

At the age of 46, he is a rags-to-riches success story in the burgeoning industry of payday lending. He once described in detail his early days in sales, as a high school dropout working the ring-toss game on travelling carnival circuits. From there he moved on to selling insurance. In 1998, he opened the first Stop ‘N’ Cash store in his hometown of Kitchener and started selling franchises.

"I was always in sales," Voisin was quoted as saying in a 2002 feature article on his business.

Voisin and other principals of Stop ‘N’ Cash aren't saying much about their business these days. Their lawyer is doing the talking now.

Earlier this year, Voisin, Stop ‘N’ Cash and the owners of each of its 59 Ontario franchises were named as defendants in a proposed class-action lawsuit launched by a former customer who alleges the business charges criminal interest rates on payday loans.

It's one of many proposed suits that have popped up recently, naming payday lenders from Newfoundland to British Columbia and alleging the same — that the fees they charge are just another way of charging interest and hike the rate over the 60 per cent annual limit spelled out in the Criminal Code of Canada.

What sets Stop ‘N’ Cash apart from others is a rather unique and hefty "death and disability" insurance fee it tacks on to its loans, equal to 24 per cent of the amount borrowed. The insurance covers losses by individual stores in the event a customer is incapacitated. Clients are also charged interest at a rate of up to 48 per cent per annum.

The stores pocket most of the insurance fee. According to company information posted on the Internet, 97 per cent of the insurance premium is "rebated" to franchisees.

Add to that a one-time setup fee of $11 and Stop ‘N’ Cash, which offers only payday loans, becomes the most costly of the payday lenders. In a Star comparison of rates and fees charged by 12 stores in Toronto, Stop ‘N’ Cash topped the list. A $120 loan for two weeks cost the Star $41 — $11 for the setup fee, 30 cents in interest, and $29.70 for the insurance fee.

The insurer of Stop ‘N’ Cash's choice is SNC Insurance Company Inc. It was incorporated in 1999 in Barbados and lists George Voisin as a director. George, a Kitchener tax lawyer, is related to Tim. They live next door to each other, and George is listed as a partner in a couple of Stop ‘N’ Cash franchises.

According to the Criminal Code, insurance fees are not considered interest. The Stop ‘N’ Cash insurance charge seems a clever way around the interest/fees class-action mess other payday lenders — including industry leader Money Mart — are caught up in.

There is one rather major snag in the Stop 'N' Cash approach, however, and it's at the heart of the proposed class action against the lender. SNC Insurance is not registered to offer insurance in Ontario and never has been, says the Financial Services Commission of Ontario.

In her proposed class-action suit against Stop ‘N’ Cash, Peggy Davis, a retired City of Windsor department director, alleges the insurance fee is a sham created by the company to exclude the fee from the definition of interest in the Criminal Code.

Davis is seeking, on behalf of the class, return of the interest, as well as $28 million in costs and damages. The suit alleges that the company for years charged her and other clients rates well above the legal limit of 60 per cent per annum, and conspired to do so.

The allegations in Davis' statement of claim have not been proved in court.

Tim Voisin didn't respond to calls from the Star. George Voisin directed questions to Toronto lawyer Steve Sofer. Sofer, speaking on behalf of his clients, said it is his understanding that SNC Insurance doesn't need a licence to do what it does in Ontario. That's because SNC isn't actually selling insurance to Stop ‘N’ Cash customers. Instead, Sofer says, Stop ‘N’ Cash has purchased a master policy from the insurer in Barbados, which individual stores in the chain have signed on to. Each loan handed out gets tacked on.

"This business model tries to comply with both the Criminal Code and any other applicable laws," said Sofer, "and (the company) believes it does."

The Star took out a loan at a Toronto Stop ‘N’ Cash store, and asked for a copy of what was titled an "SNC Insurance Company (Barbados) Inc. Certificate of Insurance." The document details the name of the "applicant" as the reporter who took out the loan, and the amount insured. It sets out the terms of the agreement — essentially, in the event of total disability or death, SNC Insurance will pay off the loan and interest directly to the Stop ‘N’ Cash store.

When told of the document, Sofer was surprised. He said the franchisee who handed over the certificate never should have done so. He said the form has been changed since the Star took out the loan, and that the company wants to ensure no one else receives a document that might leave a customer with the impression they are actually being issued insurance.

"I don't think that paper appropriately describes what's actually taken place," Sofer said. "It would be wrong if they were thinking that they are the ones who are actually (being) insured."

The Financial Services Commission of Ontario oversees insurance in the province. Spokesperson Rowena McDougall said it is possible for a company with a head office in a foreign jurisdiction to buy insurance from an insurer in that country, then tailor the policy to provide coverage to the company's affiliated companies worldwide.

The affiliated companies could then enrol, or sign on, people in other jurisdictions, including Ontario, without having to be registered in the province, McDougall said.

Sofer, relaying information provided by his clients, said the policy was purchased in Barbados. He said his client told him they are a Canadian company.

Sofer said Stop ‘N’ Cash welcomes regulation and clear rules about what companies can and cannot do.

"They want to operate completely within the law," he said. "If the plaintiff's lawyers are successful, the only people who will really benefit are the plaintiff's lawyers. These companies all have customers for a reason. If the business didn't exist, I don't know what they'll do for the source of funding."

Sofer says his clients prefer to fight the allegations in court, not in the media. "We say that, on an individual by individual basis, everything that the company did was in compliance with the law."

Two years ago, when Tim Voisin was talking to the media, he summed up the Stop ‘N’ Cash empire he has built as one that serves middle-class working people who are overspending, living paycheque to paycheque, or experiencing unexpected expenses, with a loan that banks don't offer.

It's a business that, not unlike the ring-toss, all but guarantees success for the owner.

Voisin, in the article, said the loan default rate was about 2 per cent. He said the first outlet he opened was pulling in revenues of $2 million a year. Business was "snowballing," with franchises selling at $25,000 apiece. Stores had been sold in England and Australia.

"We do one thing," Voisin said. "And we're good at it."

And, as the Stop 'N' Cash Web site puts it: "Like the carnival employee running the most popular game on the midway, everyone is lining up to play (Voisin's) game."

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