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March 27, 2012 /PRNewswire/ - On
March 23, 2012, Consumer Protection BC issued a decision and Compliance Order. A press release regarding this decision was issued
March 26, 2012.
This release noted: "Cash Store has satisfied Consumer Protection BC that it does not make payday loans contingent on the supply of cash cards by confirming that they are providing an option to consumers, in addition to cash cards, to receive their money in a timely manner."
However, the Compliance Order directs the Cash Store Financial Services Inc. to:
"Refund to all borrowers with loan agreements negotiated with the Respondent or its subsidiaries between November 1, 2009 and the date of this order, the amount of any issuance fee charged, required or accepted for or in relation to the issuance of a cash card."
The Order also directed to the Company to pay an administrative penalty of
$25,000 in addition to costs.
Cash Store Financial disagrees with the Director's Order and is considering whether or not to launch an appeal. In any event, the quantum associated with any potential refund would not be significant.
March 23, 2012 Order was issued in culmination of a formal reconsideration process requested by Cash Store Financial in
The Reconsideration request was in response to a Determination issued by Consumer Protection BC on
November 9, 2010. The Order issued
November 9, 2010, directed Cash Store Financial not to "require or accept any amount for or in relation to a cash card issued to a borrower." This Order was predicated on the Director's conclusion that Cash Store Financial is an issuer of cash cards.
In its Reconsideration application, Cash Store Financial submitted that it is not an issuer of cash cards and that cash cards distributed through the company's retail networks are in fact issued by a federally regulated financial institution that is arms-length and third party to Cash Store Financial. Consumers acquire cash cards from this third party through agreements that are separate and distinct from any arrangements they may have with subsidiaries of Cash Store Financial.