Cash Store ordered to pay $1M for illegal payday loans

The Cash Store, which also operates as Instaloans,has been ordered to repay more than $1 million to B.C. customers who were charged exorbitant interest rates on payday loans.

One of those customers was John Rahberger, a man on a disability pension, who went to the Cash Store two years ago for a payday loan.Rahberger got into a vicious cycle of borrowing two loans a month, every month.

"I was stuck. They had me over a barrel," said Rahberger.

Now he and others like him,who in total took out 68,000payday loans between November 2009 and March 2012,are in for a refund.

I'm hoping they realize enough is enough and they can't do this to people anymore.- John Rahberger

Consumer Protection B.C. has ordered the Cash Store to repay them $1 million.That's because B.C. regulations prohibit payday lenders from chargingmore than 23 per cent interest per month.

Between November 2009 and March 2012, however,Cash Store Financial Groupwhich operates Cash Stores and Instaloansin B.C.was doing just that. It wascharging customers extra to load the loans onto debit cards, before cashing them.

A CBC News investigation at the time found one customer paying approximately 35 per cent a month.

Consumer Protection B.C. fought the Cash Store all the way to B.C. Supreme Courtto force the company to pay back the money.

The Cash Store lost.

"Consumers have waited long enough, and it's time for Cash Store to refund their money," said ManjitBainsof Consumer Protection B.C.

Before the legal battle, Cash Store Financial was ordered to place $1 million into a trust account. It's that money that will be used to repay the overcharged customers.

If the Cash Store is unable to find all of the overcharged customers, Consumer Protection B.C. will take over the search.

"We want the $1 million that the cash store owesback in the pockets of British Columbian consumers," said Bains.

Rahbergersaid he is "ecstatic" with the outcome.

"It makes me feel kind of vindicated, really," he said.

"I'm hoping they realize enough is enough and they can't do this to people anymore."

Cash Store told CBC News on Friday it is disappointed with the decision and is considering its options. The payday lenderhas 30 days to appeal the ruling.

Backgrounder: Payday lendingin B.C.