The consumer organization ACORN is naming Money Mart its "Loan Shark of the Year" to protest what it calls the company's predatory payday loans, high fees for check-cashing and wiring money, and high interest Refund Anticipation Loans.
It's the second year that ACORN -- the Association of Community Originations for Reform Now -- has given its loan shark award to Money Mart, which earlier this week lost its bid for have a Canadian consumer lawsuit dismissed.
"This company's entire business is based on preying on people in need," said California ACORN member Paulette Chappill-Otten. "And we aren't going to take it any more."
The interest rates on Money Mart's payday loans range from 266% to 912%.
While Money Mart says payday loans help people in a one-time emergency, ACORN charges that payday loans get people deeper in debt and that Money Mart's profits come from customers who can't pay the loans back and so are forced to repeatedly renew the loans and pay additional interest.
A $300 payday loan from Money Mart costs $352.50. If after two weeks the customer can't pay the full amount, they pay the $52.50 finance charge and Money Mart rolls the loan over for two more weeks.
If, as in many cases, this continues for three months, the customer will have paid Money Mart $341 in interest and still owe the entire $352.50 loan amount.
"Money Mart is making a killing from people just trying to make a living," says Cindy Ransom, chair of the British Columbia ACORN's Guildford chapter. "That is unacceptable."
ACORN said it wants Money Mart to stop its predatory practices and agree to the same changes other tax preparers have agreed to.
Over the last two years, ACORN has won reductions in the prices of RALs and other refund products at the three largest tax preparation companies in the country H&R; Block, Jackson Hewitt, and Liberty Tax and has won improvements in the disclosures and information that these companies provide to their customers about their refund options.
North of the Border
The Supreme Court of Canada this week dismissed a bid by the company to derail a proposed class-action suit launched by Windsor pensioner Margaret Smith, who is alleging the fees and interest on the company's short-term payday loans exceed the legal rate of interest set out in the Canadian Criminal Code 60 per cent per annum many times over.
The Supreme Court dismissed Money Mart's bid to appeal lower court decisions that found arbitration and no-claim waivers signed by the company's customers did not preclude them from suing the company.
Money Mart is owned by Dollar Financial Group, Inc. With more than 1,000 locations in the United States, Canada and the United Kingdom, it claims to be the largest international network of retail financial services stores.