Unregistered payday lenders intimidate cash-strapped borrowers during pandemic


The pandemic economy is forcing some Nova Scotians to turn to unregistered online payday lenders who resort to harassment, intimidation and name calling when customers fall behind on payments, says a credit counselor.

John Eisner, president and CEO of Credit Counseling Services of Atlantic Canada, said most of his recent clients are struggling with short-term loans from online lenders.

Loans average between $ 800 and $ 900, he said, with most people borrowing from different companies.

“When you’re desperate, people take the money. It’s easy to get to,” Eisner said.

Insults and harassment

Eisner said the aggressive collection tactics used by some online lending services violate regulations in all Canadian provinces. The problem, however, is to apply these regulations when online lenders operate regardless of provincial boundaries.

Eisner provided CBC News with a copy of an email exchange between one of its credit counseling clients and an online payday loan service, with identifying details removed.

“Today we start with your shit referrals… Now we start calling your sister and all the other referrals they have and all the referrals in the system,” a lender rep wrote in an email. November 30, 2020.

“It’s terrible, the language is coming out of them,” Eisner said. “We have a client right now, they are at risk of losing their job because this company will not stop calling the employer.”

Regulatory limbo

Of the 20 online loan companies Eisner searched in the past three months, 16 were not registered to operate in Nova Scotia.

For most of the others, he could not find provincial registration in any Canadian jurisdiction.

“Some of them indicated that they were authorized in Quebec. We went to check them there, and they are not even authorized in Quebec,” he said. “So this is problematic.”

The government has limited authority

A spokesperson for Service Nova Scotia, the ministry that regulates payday loans, said its power to act is limited when a lender is not licensed provincially.

But Tracy Barron noted that there is legislation in Nova Scotia that protects borrowers and their families from harassment and prohibits contacting an employer.

“A consumer could seek legal advice on a lender’s obligations under the Consumer Creditors Conduct Act or contact the police,” Barron said.

Cpl. Chris Marshall, spokesperson for the RCMP in Nova Scotia, said there had been no public complaints about payday loans in 2021, but encouraged complainants to voice their concerns.

“While not all communications reach the level of harassment, it is best to at the very least contact the police and discuss the specific situation with an officer,” Marshall said in an emailed statement.

Eisner said the fastest way to verify a listing in Nova Scotia is to do a free online search of the Business Corporations Register.

pointless loophole

He advises consumers to avoid payday loans because of “astronomical interest rates.”

But he shared a great tip for payday loan borrowers dealing with an unregistered online lender: Legally, you don’t have to pay them interest.

“Due to the fact that they are not registered in the province of Nova Scotia, you are only required to reimburse the principle,” he said.

Eisner warned that the law would not prevent online lenders from tracking down borrowers. Although he never referred a harassed client to the police, he said he would consider doing so in the future.

“When they harass you and your family members, your references and your employer, and yet the province of Nova Scotia can’t do anything about it, that’s a problem,” he said.


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