Watchdog Tells Consumers To Be “Vigilant” About Illegal Payday Lenders
The province’s financial watchdog is warning consumers about unlicensed online payday lenders operating illegally in New Brunswick.
The Financial and Consumer Services Commission has received a series of recent complaints about unlicensed lenders targeting New Brunswickers and using inappropriate collection practices, such as calling borrowers at their workplaces and making threats.
In some cases, lenders call borrowers up to 50 times a day, the commission said in a statement Monday.
The payday loan industry relies on short-term loans with high interest rates that are supposed to be paid off by the next paycheck. The penalties for missed payments are severe. The industry has been criticized for exploiting the vulnerable and worsening the debt cycle.
On January 1, New Brunswick introduced new regulations to protect consumers, including compulsory licenses for payday lenders.
Alain Doucet, compliance officer in the commission’s consumer division, said lenders cannot contact a borrower at their workplace or call their employer. They also cannot harass, threaten or seize a borrower’s salary, he said.
“You have to be vigilant,” Doucet said, adding that people should completely avoid using unlicensed payday lenders.
The new rules cap the amount lenders can charge at $ 15 per $ 100 borrowed, and licensed businesses must meet a series of disclosure requirements.
There are six licensed payday lenders in the province. The commission is not sure how many unauthorized online transactions are active in New Brunswick.
The commission identified 14 on Monday:
- royal finances.ca
- Fast Loans.ca
Difficult to locate online lenders
Doucet said he has contacted lenders about compliance requirements, but law enforcement is getting more difficult with online businesses.
“A lot of these businesses are difficult to locate… because they are online,” he said.
“They can frequently change their web pages, their URLs, but our law enforcement and investigative teams are on that right now and we’re trying to locate them as best as possible.”
If found guilty by a court, unlicensed lenders face fines of up to $ 250,000 and the commission’s domestic tribunal can impose an administrative penalty of up to $ 100,000, a he declared.
For consumers who have borrowed from unlicensed lenders, Doucet said they should call the commission to share their stories and receive advice on their rights and responsibilities.