A recent provincial investigation uncovered that several Quebec-based companies, posing as legitimate payday lenders, allegedly engaged in illegal practices such as charging excessive interest rates and using harassment tactics to target borrowers in Alberta. The Consumer Investigations Unit (CIU) of Alberta has successfully prosecuted and convicted individuals and companies implicated in offering predatory loans to Albertans and employing coercive methods to collect debts, as stated in an official announcement by the provincial government. The convictions led to the issuance of court orders and fines, with the largest penalty amounting to $25,000.
During the investigation, it was revealed that the accused utilized phone-blocking techniques, specifically telephony denial of service attacks, to coerce borrowers into repaying debts by inundating and disrupting phone lines. Denial of service attacks typically involve flooding a service with repetitive, incomplete requests, causing system operations and functions to be delayed due to the consumption of all available resources. These attacks not only affected the borrowers but also impacted their family members, employers, and unrelated third parties, including private businesses, a seniors’ residence, an elementary school, and hospitals.
According to the government, Service Alberta and Red Tape Reduction Minister Dale Nally emphasized that the CIU’s probe exposed the use of increasingly sophisticated tactics by illegal lenders to target consumers through the misuse of telecommunication systems for intimidation and pressure. The investigation was initiated in response to complaints regarding illicit lending activities reported the previous year. Several individuals and companies entered guilty pleas between April and June of this year and were found guilty of various offenses, such as harassment, operating without proper licenses, and issuing loans at criminally high interest rates.
The convictions resulted in fines ranging from $5,000 to $25,000, along with the imposition of five-year peace bonds that prohibit the involved parties from owning, operating, or being associated with lending-related businesses in Alberta. The province emphasized that high-cost credit loans with an annual percentage rate (APR) exceeding 32% are regulated under the Consumer Protection Act and necessitate a valid license for operation. Notably, interest rates surpassing 35% may constitute a criminal offense, and payday lenders are constrained from charging more than $14 per $100 borrowed. The government advised consumers to exercise caution when seeking loans, ensuring that lenders possess the necessary licenses, carefully reviewing loan terms, and comprehending all associated fees.