Court backs lawsuit against payday lenders

Smith's proposed suit against Money Mart, which has 342 stores in Canada, is one of at least eight proposed actions against Canadian payday lending.

The Toronto Star
June 24, 2005

Court backs lawsuit against payday lenders
Jim Rankin

A bid by Money Mart and its parent company to snuff out a proposed class action lawsuit alleging its payday loan rates are criminal has failed following a court ruling in favour of Margaret Smith, a Windsor pensioner and representative plaintiff.

The ruling by Justice Ellen Macdonald of the Ontario Superior Court of Justice is a blow to the company and its U.S. parent, the Dollar Financial Group. They had argued the court had no jurisdiction over the U.S. company, and that loan paperwork Smith signed meant she must enter into arbitration before any other claim could proceed.

It will also likely send a chill through the Canadian payday lending industry, which is lobbying Ottawa and the provinces for regulation that will allow it to continue offering high-cost, short-term loans.

"We want to move to certification (of the class action suit) now, and promptly if we can," said Harvey Strosberg, Smith's lawyer.

Dollar Financial Group, based in Berwyn, Penn., and Money Mart, headquartered in Victoria, did not respond to requests for comment yesterday.

Smith, whose story was featured in a 2004 Toronto Star series on payday lending, is arguing the arbitration clause and the payday loan contract are illegal, and that fees and interest exceed the legal limit.

Smith's proposed suit against Money Mart, which has 342 stores in Canada, is one of at least eight proposed actions against Canadian payday lending.


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