Money Mart rates legal, court hears

Money Mart did not charge illegal interest rates when it responded to public demand in the mid-'90s by introducing "fast cash advance loans," a lawyer for the company said yesterday as the defence opened its case in a multi-million-dollar class action trial.

The class action lawsuit alleges Money Mart and its U.S. parent company, Dollar Financial Group Inc., breached section 347 of the Criminal Code by charging and collecting fees and interest at an effective annual interest rate in excess of 60 per cent on its so-called payday loans.

But lawyer Paul Morrison, who represents Money Mart, says customers could repay those loans on or before the borrowers' next scheduled payday, thereby avoiding extra charges. While those charges could exceed 60 per cent, they do not constitute interest payments, the company maintains.

"We say cheque-cashing fees and item fees are not payable for advancing of credit so do not fall under the definition of interest under 347," Morrison said.

Ontario Superior Court Justice Nancy Spies is presiding over the trial, which is expected to last six weeks.

The total settlement sought on behalf of 264,000 plaintiffs in Ontario who received a "fast cash advance" or payday loan between Aug. 19, 1997, and Sept. 9, 2007, is $224 million plus interest.

The defence plans to call company executives as well as authors of public-opinion surveys to show the company's customer base is not poor and uneducated as portrayed in the statement of claim filed by lawyers on behalf of the plaintiffs, Morrison said.

Money Mart representatives in court distributed 2007 survey data showing the average "payday" loan customer is 39. More than half, 51 per cent, have completed post-secondary education and 42 per cent reported a household income of less than $50,000 a year, which is about the provincial average.

Source : http://www.thestar.com/News