Several Quebec-based companies posing as legitimate payday lenders have been found by a provincial investigation to have allegedly utilized illegal interest rates and intimidation tactics to target borrowers in Alberta. The Consumer Investigations Unit (CIU) in Alberta has taken legal action against individuals and companies accused of offering predatory loans to Albertans and using coercive methods to collect debts. The convictions resulted in various court orders and fines, with the highest penalty reaching $25,000.
Investigators discovered that the accused employed telephony denial of service attacks to pressure borrowers into making repayments by inundating and disrupting phone lines. Such attacks involve overwhelming a service with repeated requests, causing system operations to be delayed due to the excessive resource consumption. According to the government, these attacks affected not only borrowers but also their family members, employers, and unrelated third parties, such as private businesses, a seniors’ residence, an elementary school, and hospitals.
Service Alberta and Red Tape Reduction Minister Dale Nally stated in a news release that the CIU’s investigation uncovered increasingly sophisticated tactics used by illegal lenders to target consumers. The investigation into illegal lending activities was initiated by the CIU following complaints last year. Several individuals and companies pleaded guilty between April and June of this year to various offenses, including harassment, operating without proper licenses, and providing loans at criminal interest rates.
The convictions led to fines ranging from $5,000 to $25,000, as well as the imposition of five-year peace bonds prohibiting those involved from engaging in lending-related businesses in Alberta. Loans with an annual percentage rate (APR) exceeding 32 percent are regulated under the Consumer Protection Act and necessitate a valid license, as per the province. The release highlighted that interest rates above 35 percent could constitute a criminal offense, with a cap of $14 per $100 borrowed for payday lenders. Consumers are advised by the provincial government to exercise caution when borrowing money, ensuring lenders are licensed, reviewing loan terms, and understanding all associated fees.