Unlicensed online payday lenders are targeting New Brunswickers, warns the Financial and Consumer Services Commission (FCNB).
FCNB is seeing an increase in complaints from consumers about inappropriate behaviour from payday lending businesses that are not licensed to operate in the province. These complaints include reports of intimidating collection practices and aggressive communication methods.
Some consumers have reported that unlicensed payday lending businesses have contacted them at their place of employment or contacted their employer or coworkers when they fall behind in their payments, which is against the law.
Consumers seeking out credit options should be aware that using the services of a company that isn’t licensed to operate in the province puts them at a greater risk for harm. Using licensed lenders provides consumers with some added legal protections from predatory lending practices, such as interest rate caps, disclosure requirements and cancellation options.
Since the implementation of the Cost of Credit Disclosure and Payday Loans Act in 2018, payday lenders must be licensed by FCNB, whether they have a physical location or are only offering loans online.
Payday advances are high-cost loans. New Brunswick legislation caps the cost of a payday loan at $15 per $100 borrowed, which is the equivalent of 392 per cent interest over a 14-day period. Consumers are reminded to consider all the options available for short-term borrowing situations and make sure they understand the cost of borrowing before agreeing to a payday loan.
Consumers are cautioned that the following online businesses are not licensed to offer, arrange or provide payday loans in New Brunswick:
Consumers can check if a payday lender is licensed by visiting FCNB’s website. FCNB also has resources on its website to educate consumers about the importance of using licensed payday lenders and to help consumers understand their rights and responsibilities when using a payday lender.
The Financial and Consumer Services Commission has the mandate to protect consumers and enhance public confidence in the financial and consumer marketplace through the provision of regulatory and educational services. It is responsible for the administration and enforcement of provincial legislation that regulates the following sectors: securities, insurance, pensions, credit unions, trust and loan companies, co-operatives, and a wide range of other consumer legislation. It is an independent Crown corporation funded by the regulatory fees and assessments paid by the regulated sectors. Educational tools and resources are available online.