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Newfoundland and Labrador
Regulation 2019


NEWFOUNDLAND AND LABRADOR REGULATION 10/19

NEWFOUNDLAND AND LABRADOR
REGULATION 10/19

Payday Loans Regulations
under the
Consumer Protection and Business Practices Act
(O.C. 2019-057)

(Filed February 27, 2019)

Under the authority of section 83.11 of the Consumer Protection and Business Practices Act, the Lieutenant-Governor in Council makes the following regulations.

Dated at St. John’s, February 26, 2019.

Elizabeth Day
Clerk of the Executive Council

REGULATIONS

Analysis


        1.   Short title

        2.   Interpretation

        3.   Prohibited practices

        4.   Prohibited practice - tied selling

        5.   Prohibited practices - maximum repayment

        6.   Cash cards

        7.   Maximum total cost of borrowing

        8.   Signs and notices

        9.   Notice in payday loan agreement

      10.   Advertisements

      11.   Commencement


Short title

        1. These regulations may be cited as the Payday Loans Regulations.

Interpretation

        2. In these regulations

             (a)  "discount" means to deduct or withhold from the initial advance of a payday loan an amount representing a portion of the cost of borrowing;

             (b)  "personal information" means personal information as defined in the Access to Information and Protection of Privacy Act, 2015;

             (c)  "rollover loan" means the extension or renewal of a payday loan that imposes additional fees or charges on the borrower, other than interest, and includes the advance of a new payday loan to pay out an existing payday loan; and

             (d)  the definitions in section 2 and Parts VII.1 and VIII of the Act apply.

Prohibited practices

        3. (1) A payday lender shall not do one or more of the following:

             (a)  issue a new payday loan to a borrower who already has a payday loan issued by the payday lender;

             (b)  discount the principal amount of a payday loan;

             (c)  grant a rollover loan;

             (d)  charge, require or accept a fee, penalty, rate, commission, consideration, charge or other amount to or from a borrower in addition to the charges provided for in the agreement with that borrower in relation to the payday loan;

             (e)  require that a payday loan be due before the day on which the borrower shall receive his or her pay or other income following the date of the payday loan;

             (f)  require or request a payment from the borrower before it is due under the payday loan agreement;

             (g)  issue a payday loan in excess of 50% of the borrower's net pay or other net income to be received during the payday loan term;

             (h)  require or request that a borrower insure a payday loan;

              (i)  require, request or accept from the borrower or another person, as security for a payday loan, personal property or real property;

              (j)  require, request or accept from the borrower or another person, as security for a payday loan, documents that may be used to transfer title in the borrower's personal property or real property;

             (k)  state or imply that a payday loan would improve the borrower's credit rating;

              (l)  accept a cheque from the borrower unless it is payable to the payday lender;

           (m)  require, request or accept an undated cheque from a borrower;

             (n)  require, request or accept a post-dated cheque, pre-authorized debit or future payment of a similar nature for an amount exceeding the amount to repay the payday loan by the due date;

             (o)  require, request or accept information that would give the payday lender direct access to a borrower's bank account, except for pre-authorization for repayment of a specific payday loan;

             (p)  make unauthorized withdrawals from a borrower's bank account;

             (q)  fail to include the name of the payday lender as shown on the payday lender licence in all written correspondence with the borrower;

              (r)  fail to mention the name of the payday lender as shown on the payday lender licence during a personal call or telephone call with the borrower;

             (s)  make a personal call or telephone call for the purpose of collecting or attempting to collect a debt except between 8 a.m. and 9 p.m. local time of the location of the recipient of the call;

              (t)  directly or indirectly threaten or state an intention to proceed with an action for which there is no lawful authority;

             (u)  contact or attempt to contact the borrower, a member of the borrower's household, a relative of the borrower, the borrower's employer or a neighbour, friend or acquaintance of the borrower in such a manner as to constitute harassment, including

                      (i)  the use of threatening, profane, intimidating or coercive language,

                     (ii)  the use of undue, excessive or unreasonable pressure, or

                    (iii)  the use of telephone, email or other methods of contact, other than traditional mail, to call or send messages excessively;

             (v)  give a person, directly or indirectly, by implication or otherwise, false, misleading or deceptive information, including references to the police, a law firm, prison, credit history, court proceedings, a lien or garnishment;

            (w)  use, without lawful authority, a summons, notice, or demand, or other document, expressed in language of the general style or purport of a form used in a court of the province, or printed or written or in the general appearance or format of that form;

             (x)  contact a borrower's spouse, cohabiting partner, relative, neighbour, friend or acquaintance other than to obtain the borrower's residential address, personal telephone number or employment telephone number;

             (y)  contact the borrower's employer other than to confirm the borrower's employment status, business title, the address of the business or the date of the next payday;

             (z)  contact a borrower at the borrower's place of employment where the borrower

                      (i)  requests the payday lender not to contact the borrower there,

                     (ii)  makes reasonable arrangements to discuss the payday loan with the payday lender, and

                    (iii)  discusses the payday loan with the payday lender in accordance with those arrangements;

          (aa)  communicate information about the payday loan or the existence of the payday loan to a person except the borrower unless the borrower has expressly consented otherwise;

          (bb)  enter into or arrange wage assignments with a borrower or the employer of a borrower;

           (cc)  publish or threaten to publish a borrower's failure to pay;

          (dd)  give false, misleading or deceptive information in advertisements, solicitations or negotiations with respect to a payday loan;

           (ee)  include an enticement to enter into a payday loan for a prize or reward in a representation or advertisement;

            (ff)  require, request or accept consent from a borrower to use or disclose the borrower's personal information for a purpose other than offering, arranging or providing a payday loan; and

           (gg)  enter into a payday loan agreement that does not comply with this regulation.

             (2)  An assignment of wages is not valid where it is given in consideration of a payday loan or an advance under a payday loan, or to secure or facilitate a payment in relation to a payday loan.

Prohibited practice - tied selling

        4. (1) A payday lender shall not make a payday loan contingent on the supply of goods or services.

             (2)  A payday loan agreement shall not include a term or condition relating to the supply of goods or services.

Prohibited practices - maximum repayment

        5. (1) In this section, "pay period" means

             (a)  the period from the date on which the payday loan is entered into until the day on which the borrower next receives his or her pay or other income; or

             (b)  a period during the term of a payday loan from the day on which a borrower receives his or her pay or other income until the day on which the borrower next receives his or her pay or other income.

             (2)  A payday lender who enters into a third or subsequent payday loan agreement with a borrower in a 62 day period shall,

             (a)  where the borrower is paid or otherwise receives income on a bi-weekly, semi-monthly or more frequent basis, provide in the payday loan agreement that repayment is to be spread over at least 3 pay periods; or

             (b)  where the borrower is paid or otherwise receives income on a less frequent basis than that referred to in paragraph (a), provide in the payday loan agreement that repayment is to be spread over at least 2 pay periods.

             (3)  A payday lender shall not require a repayment under a payday loan agreement referred to in subsection (2) that is more than,

             (a)  for a borrower referred to in paragraph (a) of that subsection, 35% of the sum of the principal and the cost of borrowing in relation to the payday loan; or

             (b)  for a borrower referred to in paragraph (b) of that subsection, 50% of the sum of the principal and the cost of borrowing in relation to the payday loan.

             (4)  This section does not apply with respect to a payday loan that is made in anticipation of income that is to be received by the borrower as a lump sum on a one-time basis during the term of the payday loan.

Cash cards

        6. (1) For the purpose of paragraph 83.8(1)(a) of the Act, a borrower is entitled to be paid in cash the amount of credit remaining on a cash card where the balance remaining on the cash card is less than $25.

             (2)  Where a delinquent borrower has a balance of credit remaining on an expired cash card, the payday lender may recover from the cash card only the amount due on the delinquent payday loan, including the amounts prescribed in subsection 7(2), and shall return the remaining balance to the borrower immediately on demand by the borrower or by the director.

             (3)  The payday lender shall issue a receipt to the borrower for money recovered from a cash card under subsection (2), and shall inform the borrower of a remaining balance on the cash card and how the balance may be refunded.

Maximum total cost of borrowing

        7. (1) The maximum total cost of borrowing that may be charged, required or accepted by a payday lender is $21 per $100 lent.

             (2)  In addition to subsection (1), where a borrower fails to repay the amount specified in the agreement, the payday lender may charge the following:

             (a)  interest at a rate of 2.5% per month, not to be compounded; and

             (b)  a one-time fee of $20 for each dishonoured cheque or dishonoured pre-authorized debit.

             (3)  The maximum charges under this section include all amounts that can be collected directly or indirectly from a borrower.

Signs and notices

        8. (1) A payday lender shall prominently display at each of the payday lender's locations

             (a)  a sign visible to borrowers immediately on entering the location; and

             (b)  a sign visible to borrowers at each place where a payday loan is negotiated.

             (2)  The signs required under subsection (1) shall have text in a colour that contrasts with the background and shall consist of only the following information in the following order:

             (a)  the words "Maximum fees and charges permitted in Newfoundland and Labrador for a payday loan:  $21 per $100 lent";

             (b)  the words "We charge", followed by the payday lender's total fees and charges for a payday loan and then the words "in fees and charges";

             (c)  the words "For a $300 loan for 14 days, the total cost of borrowing is", followed by the payday lender's total fees and charges for a $300 loan for 14 days;

             (d)  the words "This information meets the requirements of the Consumer Protection and Business Practices Act"; and

             (e)  the words "Payday Lender's Licence Number", followed by the payday lender's licence number.

             (3)  A sign under paragraph (1)(a) shall have text at least 72 points in size.

             (4)  A sign under paragraph (1)(b) shall have text at least 28 points in size.

             (5)  A payday lender who engages in the payday loan business

             (a)  by means of the internet shall display the information required under subsection (2) on a page of the payday lender's website that precedes the payday loan application; and

             (b)  by telephone shall disclose to a prospective borrower the information required under subsection (2).

Notice in payday loan agreement

        9. A payday loan agreement shall include a statement that reads as follows:

"Payday loans are regulated under the Consumer Protection and Business Practices Act.  For information on the requirements relating to payday loans, please contact the Consumer Affairs Division of Service Newfoundland and Labrador."

Advertisements

      10. An advertisement and representation about a payday loan shall include

             (a)  the maximum total cost of borrowing;

             (b)  the actual cost per $100 lent; and

             (c)  the APR for the payday loan.

Commencement

      11. These regulations shall come into force on the day that An Act to Amend the Consumer Protection and Business Practices Act, SNL2016 c46, comes into force.