canda pay day loans

Action 9: Woman loses $1200 to online payday loan scam

CHARLOTTE, N.C. -- Times got so tough for Shayvonia Badger that she moved back home with her mother. Later, becoming more desperate, she went online looking for a payday loan.

She saw an ad for Casa Loan Services of Miami, Fla.

Badger talked to a company representative, who told her she qualified for a $7,500 loan and could get it quickly. “I would have the money the next day,” Badger said.

The representative told Badger she had to wire $1,200 as collateral to the lender in Canada.

After she sent the money, Casa Loan called back saying before it could give her the loan, she would have to send $500 more for Canadian taxes.

“That’s when I realized, no, it’s not. It’s a scam,” she said.

She said the company promised to refund her money but never did. Now, when she calls their number she gets a recording.

The Better Business Bureau calls this a classic advance fee loan scam.

The BBB said Casa Loans has an F-rating and uses a Miami address only to make the consumers think it is based in the United States when in fact it is in Canada.

“It’s a scam,” said BBB representative Tom Bartholomy. “There is no legitimate lending company out there that’s going to charge you an advance fee. Sending a money order to Canada to get your loan just doesn’t happen.”

Badger now says be careful. “Don’t trust everything that pops up on the Internet.”

She now realizes she is not getting her $1,200 back, an expensive lesson learned the hard way.

Payday Loans Scandals

There are many reasons that you should never take out a payday loan (sometimes called a cash advance), including the high interest rates that make it financially irresponsible. Now, however, there are even more reasons to avoid getting a payday loan in Canada because of the high number of lawsuits against these loan companies.

Payday loan companies are notorious for disguising the amount of interest they charge consumers; they hide it in various fees. These fees often add up to more than the interest itself. In Canada, it is illegal to lend money with more than 60% interest. Sixty percent seems like an exorbitantly high interest rate in and of itself, but when you look at the fact that companies manage to charge more than this interest rate, the figures become positively alarming.

Not A Payday Loan

There have been numerous lawsuits filed against payday loan companies. In Canada, Bill McNally of McNally, Cuming, and Raymaker filed a suit in Calgary claiming that payday loan companies charged clients illegally high interest rates. The payday loan company Instaloan chose to settle with McNally: people who think they are eligible claimants may contact McNally to discuss getting their money back. The government established that these payday loan companies, while only allegedly charging 59% interest were actually charging 650% interest ( not compounded) when you included all of the fees. Instaloan has set aside more than one million dollars to repay borrowers from the past eight years in Alberta, Saskatchewan, Manitoba, and Ontario.

Windsor, Ontario lawyer Harvey Strosberg of Struts, Strosberg LLP filed a lawsuit against MoneyMart, a major name in Canadian cash advances. Toronto lawyers Koskie Minsky and Paliare Roland have also joined in this motion. Although the lawsuit began in 2004, there is continuing litigation. Justice Hoy, the judge overseeing this case, has ordered that the certification hearing be in October 2006. This lawsuit accuses Money Mart of violating the 60% legal interest cap.

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