Late-payment fee protection needed: consumer group

Twelve years after a groundbreaking Supreme Court decision that was expected to protect consumers from overly inflated late fees, Canadians are worse off, according to a new report by the Public Interest Advocacy Centre, a consumer protection group.The Public Interest Advocacy Centre says provincial regulation of payday loan companies have weakened consumer protection from excessive late fees. (CBC)The decision in Garland v. Consumers Gas stated that late fees should be considered interest and subject to Criminal Code provisions governing interest rates.

But according to the report's author, Janet Lo, Criminal Code amendments have weakened consumer protection."It was hoped that consumers would have protection against penalties for late payments in that certain kinds of fees could be construed as violating the Criminal Code and the criminal rate of interest," she said in an interview with CBC News.'Consumers are no longer able to rely necessarily on the Criminal Code to enforce criminal rates of interest.'

One of the most contentious changes was allowing the provinces to regulate payday loan companies. That decision made the regulation of interest rates charged by the loan companies the responsibility of the provinces."We are concerned because the rates of interest being charged by the provinces are exceptionally high," said Lo.That means payday loan companies can get away with charging exorbitant fees for people who pay up past the due date."We've seen some payday lending companies charge a processing fee. As well, they have charged non-sufficient fund fees," she said.

Class action suits against Bell Canada

In some cases, companies have charged consumers late fees even when they've paid on time.Bell Canada recently settled a class action suit in Quebec related to late fees, and another case is still before the courts in Ontario."Bell had charged the consumer for late payments where the consumer had made the payment through a financial institution," Lo explained. The delay was in getting the payment from the financial institution to Bell.
"It was within the time that you would expect the transaction to go through, but Bell Canada didn't receive it, and then they charged the interest rate on those late payments."Lo says the Quebec case was recently settled, with Bell agreeing to pay back the fees it had taken from consumers.But she notes that with small amounts, the only recourse for consumers is a class action suit. And that can be a time-consuming and frustrating process.
Read more: http://www.cbc.ca/consumer/story/2011/01/05/con-late-fees.html#ixzz1AC6x1YTg