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Payday Lenders Information for Businesses FAQ

  • The following are answers to frequently asked questions regarding Manitoba’s payday loan legislation.
  • This document is intended to provide general information on payday loan requirements and does not go into detail regarding all applicable legislation.
  • Payday lenders will need to review the applicable legislation itself for complete details.
  • If a discrepancy is found between this document and the legislation it refers to, the legislation supersedes the information found in this document.
  • Download the Payday Lender Licence Package (PDF 445 KB)

Applicable Legislation

FAQs

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What is a payday lender?

A payday lender is a person (this includes a business) who offers, arranges or provides a payday loan.

For example, this can include a business that only offers, arranges or provides a payday loan, or it can be a business that in addition to offering payday loans also offers other goods or services such as pawn broking, income tax rebating, or retail products. Payday loan brokers are also considered to be payday lenders as defined in the Act.
s. 137 Act

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What is a payday loan?

A payday loan is a loan of money of not more than $1500.00 and for a term of no longer than 62 days (not including any extension or renewal). It is an advance of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature, but not for a guarantee, suretyship, overdraft protection or security on property or through a margin loan, pawnbroking, a line of credit or a credit card.
s. 137 and 138(1) Act and s. 2 Reg

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What is the Consumer Protection Office?

The Consumer Protection Office is a provincial government office that administers and enforces consumer protection legislation in Manitoba.

The office licences payday lenders in Manitoba and has the authority to inspect, audit, and examine records and information in order to determine compliance with the Act and Regulations.
s. 158, s. 159 Act

The Office also has the authority to issue administrative penalties, issue compliance orders and order a payday lender to pay certain costs associated with administration of the legislation.
s. 136, 161.1, 161.2 Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Do I need to be licensed to provide payday loans to Manitoba residents?

Yes. As of October 18th 2010, no payday lender may offer, arrange, or provide payday loans to residents of Manitoba from a location except under the authority of a licence issued to the person or the person’s employer for that location.
s. 139(1)(2) Act

A licence is required for each location where payday loans are offered, arranged or provided.
s. 140(2) Act

A payday lender licence is not assignable or transferable.
s. 141(1) Act

The director may refuse to issue a licence to an applicant if

  1. the applicant has been convicted of
    1. an offence under this Act, or
    2. an offence under the Criminal Code (Canada) or any other Act that, in the opinion of the director, involves a dishonest action or intent;
  2. the applicant is an undischarged bankrupt;
  3. the applicant provides incomplete, false, misleading or inaccurate information in support of the application;
  4. a licence issued to the applicant
    1. under this Act, or
    2. by an authority responsible for issuing licences with respect to the lending of money in any jurisdiction, is suspended or has been cancelled, or the applicant has applied for a renewal of such a licence and the renewal has been refused;
  5. the applicant fails to meet any qualification or satisfy any requirement of this Part or the regulations;
  6. in the director's opinion, the applicant will not carry on business according to law and with integrity and honesty; or
  7. in the director's opinion, it is not in the public interest to issue a licence to the applicant.
    s. 142(1) Act

The director may refuse to renew or may cancel or suspend a payday lender's licence:

  1. for any reason for which the director may refuse to issue a licence under section 142;
  2. if the lender fails to provide information required by the director or the regulations, or provides incomplete, false, misleading or inaccurate information to the director;
  3. if the lender contravenes or fails to comply with this Act or the regulations; or
  4. if the lender contravenes or fails to comply with a condition of the licence.
    s. 143(1) Act

A licensed payday lender must not represent, either expressly or by implication, that its licence is an endorsement or approval of the payday lender by the government.
s. 9.1(4) Reg 50/2010

Licence applications may be obtained from the Consumer Protection Office and can be downloaded online under Forms.

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What do I have to do in order to obtain a payday lender licence?

Instructions

  • Forward a completed licence application package;
  • Provide a security bond in the required amount;
  • Forward payment of applicable licence fees, to the Consumer Protection Office;
  • The legislation states that a Financial Literacy Fund may be created at a later date which may include a financial levy to be paid by payday lenders in Manitoba.
    s. 161.6 and 161.7 Act

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How much is the fee to obtain a payday lender licence?

The licence fee is $5,500.00 per lender, per location. A payday lender licence is valid for one year.
s. 7 Reg

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If I want to offer, arrange or provide a payday loan from more than one location, do I need a separate licence for each?

Yes, a separate licence is needed for each lender that offers, arranges or provides a payday loan at each location.
s. 140(2) Act

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Do I need to post a bond or some other type of security to get a licence?

Yes, security in the amount of $25,000 per location, per lender, is required for each location.
s.10(1) Reg

The security can be in one of the following forms:

  • Penal Bond – similar to an insurance policy in that the payday lender makes premium payments to the surety company.
  • Collateral Security (Currency) or Collateral Security (Negotiable Securities) – A deposit of cash, or negotiable bonds held by the Consumer Protection Office.
  • Irrevocable Letter of Credit – Given by a bank, trust company, or credit union, the buyer applies to a financial institution who then issues the letter of credit.
    s.140(5) Act

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Under what circumstances can my bond or security be forfeited?

A bond or security can be forfeited if a payday lender:

  • charges more for a payday loan than the maximum allowed by regulation
  • charges more for a transaction involving a replacement loan or the extension or renewal of a payday loan than the maximum allowed by regulation
  • charges more in relation to any default by the borrower under a payday loan than the maximum allowed by regulation
  • offers, arranges or provides a payday loan to a borrower who is indebted to the lender under an existing payday loan, unless the new loan is a replacement loan and immediately after the initial advance under the replacement loan is made, the borrower is no longer indebted under the existing loan, and
  • is unable or refuses to reimburse the borrower as required under The Consumer Protection Act.

The Director may also declare a bond or security forfeited if:

  • the payday lender has been convicted of an offence under The Consumer Protection Act, or an offence under the Criminal Code (Canada) or any other Act that, in the Director’s opinion involves a dishonest action or intent, and the conviction has become final.
  • proceedings by or in respect of a payday lender have been taken under the Bankruptcy and Insolvency Act(Canada) either by way of assignment or by petition or where proceedings have been taken by way of winding up, and in the case of a petition, a receiving order under the Bankruptcy and Insolvency Act (Canada) or a winding-up order has been made and the order has become final.
    s. 12(1) Reg

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If I offer, arrange or provide payday loans through the internet, fax, or telephone do the payday loan requirements apply to my business?

Yes, the requirements apply to payday lenders who also offer payday loan agreements with borrowers formed by internet, facsimile and telephone communications.

There are additional specific requirements relating to loans provided via internet, telephone and facsimile.

s. 137 Act and 9.1(3), 14.0.1(1)(2)(3), 14.3(2) 14.4, 16.1(1)(2), 16.2(1)(2), 18.1(1)(2)(3) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What is the maximum amount of payday loan I can lend to a borrower?

The maximum amount of loan a payday lender can extend to a borrower is 30% of the borrower’s net pay.

A person’s net pay is to be determined according to the following formula:

net pay = (MNI x 12) ÷ 26

In this formula,
MNI is the person's net income for the most recent previous calendar month in which the person received income, calculated by adding all income received by the person from all sources during that month, minus all compulsory and voluntary deductions.

For greater certainty,

  1. the proceeds of a payday loan are not to be considered income for the purpose of this section; and
  2. even though net pay is calculated on a bi-weekly basis under this regulation, the initial term of a payday loan to which the Payday Loans Part will apply may be any length of time that is not longer than 62 days.
    s. 151.1(1) Act and s. 1, 2.2(1) and s. 2.2(2) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What are the consequences if I lend a borrower more than the allowable proportion of their net pay?

If a payday lender enters into an agreement with a borrower that exceeds 30% of the borrower’s net pay as prescribed by regulation, and the borrower has not misrepresented to the lender the amount of the borrower’s net pay,

  1. the borrower is not liable for any amount charged as a cost of credit for the payday loan; and
  2. the lender must immediately reimburse the borrower , in cash, on demand by the borrower or the director, for
    1. the total of all amounts paid, and
    2. the value of any other consideration given,

as a cost of credit for the loan, including any amount paid or consideration given to a person other than the payday lender.
s.151.1(2) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What information must I give to a borrower?

At the time of making the initial advance under a payday loan or providing the borrower with a cash card that enables the borrower to access funds under a payday loan, the borrower must be given a document in a form satisfactory to the Director that:

  • states the date and time of day the initial advance is being made or the card or other device is being provided,
  • states that the loan is a high-cost loan,
  • gives notice of the borrower’s right to cancel the loan within 48 hours after receiving the initial advance or the card,
  • includes a form of notice that the borrower may use to give written notice that he or she is cancelling the loan, and
  • includes a form of receipt that the lender must use to acknowledge receipt of what was paid or returned by the borrower upon cancelling the loan; and
  • the payday lender’s business name or style, business and mailing address, email address, and telephone and fax numbers;
  • the payday lender’s licence number;
  • the borrower’s name, address and telephone number;
  • the principal amount of the loan;
  • the term of the loan in days;
  • the amount of the initial advance;
  • the total cost of credit and the APR;
  • an itemization of all fees, commissions, charges, penalties, interest and other amounts or consideration charged, paid or given, or to be charged, paid or given, by or to the lender or any other person in relation to the loan;
  • the date on which payment is due to the payday lender and, if being repaid by more than one payment, the date and amount of each payment;
  • if a cash card that enables the borrower to access funds under the loan is issued to the borrower, the following information:
    1. the terms and conditions for use of the cash card,
    2. the amount of money advanced that is available on the cash card,
    3. the expiry date, if any, of the cash card,
    4. an itemization of each fee, commission, charge, penalty, interest or other amount or consideration charged, paid or given, by or to the lender or any other person, in relation to the cash card.
  • information about the payday lenders privacy policy;
  • the following statements:
    • "If you have any questions or concerns about payday loans, cancellation rights or collection practices, contact the Consumer Protection Office at (204) 945-3800, or toll free at 1-800-782-0067".
    • "If you feel you could benefit from debt counselling, contact the Consumer Protection Office at (204) 945-3800, or toll free at 1-800-782-0067 for information”.
    • "The Consumer Protection Act provides that the Consumer Protection Office may review and verify the information, including personal information, in this loan agreement for the purposes of ensuring compliance with the Act, the regulations and the terms and conditions of the payday lender’s licence. The Consumer Protection Office may contact you directly to verify the information. It will not use your information for other purposes without your consent or unless permitted to do so by law".
  • information about the cancellation rights under section 149 of the Act, including the procedure for cancelling a payday loan and the time limit for doing so;
  • information about the consequences of the payday lender's failure to comply with subsections 147(1), 152(1), 153(1) and 154(1) of the Act;
  • if the payday loan agreement relates to an Internet payday loan, information about how any amounts or consideration described in subsections 147(2), 152(2), 153(2) and 154(2) of the Act will be reimbursed.

In addition to the document referred to in clause 148(1)(a) of the Act, a payday lender must — except in the case of an Internet payday loan — give the borrower a copy of the completed and signed final payday loan agreement, at no charge, not later than the day that the initial advance of money under the payday loan is made.
s. 148(1) Act, s. 14, s. 14.1, s.14.1(1) Reg 50/2010

All the documents and information required to be given must be clear and understandable, and the required information must be prominently displayed in the document.
s. 148(2) Act and s. 14(8) Reg

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Does legislation state where certain information must be located in the payday loan agreement?

Yes, the following sections state what information must be on the first and subsequent pages of a payday loan agreement.
s. 14(4)(5)(6)(7)(8)(9) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Do I have to give the borrower any documents?

Yes, the borrower must in every case be given a copy of their signed, completed final payday loan agreement not later than the day that the initial advance of money under the payday loan is made.
s. 148(1) Act and s. 14.1(1) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Do I have to give a borrower additional copies of their payday loan agreement if they ask for them?

Yes, in addition to any copy required to be given under subsection 14.1(1) of the Regulations, a borrower may request an additional copy of the borrower's completed and signed final payday loan agreement.
s. 148(1) Act and 14.1(1) Reg 50/2010

For greater certainty, this subsection and subsections (3) to (5) apply in the case of an Internet payday loan, even though subsection (1) does not apply.
s. 14.1(2) Reg 50/2010

The borrower may make the request orally or in writing at any time after entering into the payday loan agreement.
s. 14.1(3) Reg 50/2010

The payday lender must provide or mail the copy to the borrower

  1. within one business day of the request; or
  2. by the next day that the payday lender is open for business, if the payday lender is not open for business on the day described in clause (a)
    s. 14.4(4) Reg 50/2010

The payday lender must not charge a fee for the first copy of the agreement requested by the borrower under subsection (2), if the request is made within one year after the end of the term of the payday loan.
s.14.4(5) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What is the cost of credit and what is an APR? How are these calculated?

The cost of credit is the total of all charges and fees associated with the loan as set out in the legislation, and is expressed as a dollar value. It is the difference between the value given by the borrower and the value received by the borrower.

The Annual Percentage Rate (APR) is the total cost of credit expressed as a percentage and is annualized.

The loan agreement must also meet the requirements of Part II Credit Agreements and Leases: Cost of Credit in the Act and both applicable regulations. Please see section 6 of the Act for further information.

For the purposes of the Payday Loans Part and the regulation, in determining the cost of credit in relation to a payday loan under section 6 of the Act,

  1. value received or to be received by the borrower in connection with the payday loan does not include the cash price of any goods or services, including insurance, purchased by the borrower from the payday lender, if the payday loan is contingent on that purchase; and
  2. the value given or to be given by a borrower in connection with the payday loan includes, without limitation,
    1. the amount or consideration charged, paid or given, or to be charged, paid or given, for the purchase of any goods or services, including insurance, if the payday loan is contingent on that purchase, and
    2. any fee, commission, charge, penalty, interest or other amount or consideration charged, paid or given, or to be charged, paid or given
      1. for cashing or negotiating a cheque,
      2. for a pre-authorized debit,
      3. in relation to a cash card, including an activation fee, a reactivation fee, an inactivity fee and initial service fees, or
      4. by or on behalf of a borrower to a broker for arranging or attempting to arrange a payday loan,
      whether or not the goods or services to which the fee, commission, charge, penalty, interest or other amount or consideration relates are optional for the borrower, and whether or not the amount or consideration is charged, paid or given, or is to be charged paid or given, by or to the lender or any other person.
      s. 3(1) Reg

The prescribed formula that must be used to calculate the Annual Percentage Rate (APR) for a fixed credit agreement as it relates to the total cost of credit is found in s. 7(1)(2)(3) of the Consumer Protection Regulation (227/2006):

APR = [C ÷ (T x A)] x 100

  • C is the total cost of credit determined in accordance with section 6 of the Act.
  • T is the length of the term of the credit agreement, in years;
  • A is the average of the principal balances outstanding at the end of each interest calculation period during the term of the credit agreement before applying any payment due by the borrower.

For example a loan of $300.00 over 12 days with a total cost of credit in the amount of $51.00 has an APR of 517.03%. This is a sample calculation only:
517.03% = [$51.00 ÷.03288 x 300.00)] x 100

The higher the cost of credit, the higher the APR if the term of the loan remains the same.
s. 7(1)(2)(3) Consumer Protection Regulation 227/2006

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What is the maximum cost of credit that I am allowed to charge for a payday loan?

The maximum cost of credit a payday lender can charge, require, or accept payment in relation to a payday loan or arrange for or permit any other person to charge or to require or accept payment of any amount or consideration that would result in the total cost of credit, or any component of the cost of credit, of the loan being greater than the maximum allowed by regulation.
s. 147(1) Act

The total cost of credit for a payday loan must not be greater than 17% of the principal amount of the payday loan.
s. 13.1(1) Reg 50/2010

The total cost of credit for a replacement loan must not be greater than 5% of the principal amount of the replacement loan.
s. 13.1(2) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What are the consequences if I charge more than the allowable maximum cost of credit for a payday loan?

If a payday lender charges more than the allowable maximum the borrower is not liable for any amount charged as a cost of credit for the payday loan. The payday lender must immediately refund to the borrower in cash for the total of all amounts paid and any other consideration given, including any amount paid or consideration given to a person other than the payday lender.
s. 147(2) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What is a replacement loan, and what is the maximum cost of credit that I am allowed to charge for a replacement loan?

A replacement loan is a payday loan arranged or provided by a payday lender as a part of a series of transactions or events that results in a borrower’s debt under another payday loan previously arranged or provided by that payday lender being repaid in whole or in part.

No payday lender shall, in relation to a transaction, or series of transactions involving a replacement loan or the extension of a payday loan,

  1. charge or require or accept the payment of; or
  2. arrange for or permit any other person to charge or to require or accept the payment of,

any amount or consideration except as permitted by regulation.
s. 137 and s.152(1) Act and s. 2.1 Reg 50/2010

For the purpose of subsection 147(1) of the Act, the total cost of credit for a payday loan must not be greater than 5% of the principal amount of the payday loan, if

  1. the payday loan is an extension or renewal of a payday loan previously arranged or provided; or
  2. the payday loan is arranged or provided by a payday lender within seven days after the borrower repaid in full another payday loan previously arranged or provided by that payday lender.
    s. 2.1 Reg, s. 13.1(2)(3) Reg, s.15.4(2) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What are the consequences if I charge more than the allowable maximum for a replacement loan?

If a payday lender charges more than 5% for a replacement loan as defined in the Act and regulations then:

  1. the borrower is not liable for any amount charged
    1. for the extension or renewal of the loan or as a cost of credit relating to the extension or renewal, or
    2. as a cost of credit in relation to the replacement loan, including any amount paid or consideration given to a person other than the payday lender; and
  2. the lender must immediately reimburse the borrower, in cash, upon demand by the borrower or director, for
    1. the total of all amounts paid, and
    2. the value of any other consideration given,
    for the extension or renewal of the payday loan or as a cost of credit for the replacement loan.

This is in addition to any penalty that the lender may be subject to under any other provision of this Act or the regulations.
s. 152(2) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Can I give a borrower more than one payday loan at a time?

No. Payday lenders cannot offer, arrange, or provide a payday loan to a borrower who is indebted to the lender under an existing payday loan unless the new loan is a replacement loan and immediately after the initial advance under the new loan is made, the borrower is no longer indebted under the existing loan.
s. 154(1) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What are the consequences if I offer, arrange, or provide a borrower with more than one payday loan at any one time?

If a payday lender offers, arranges, or provides a payday loan to a borrower who is indebted to the payday lender under an existing payday loan, unless the new loan is a replacement loan and, immediately after the initial advance under the new loan is made, the borrower is no longer indebted under the existing loan:

  1. the borrower is not liable for any amount charged as a cost of credit for the new loan; and
  2. the lender must reimburse the borrower, in cash, immediately upon demand by the borrower or the director, for
    1. the total of all amounts paid, and
    2. the value of any other consideration given,
    in respect of the borrower’s cost of credit for the new loan, including any amount paid or consideration given to a person other than the payday lender.
    s. 154(1)(2)Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What is the maximum amount I can charge a borrower if their payday loan goes into default?

For the purpose of subsection 153(1) of the Act, the penalty that may be charged, required or accepted in relation to any default by a borrower under a payday loan is a penalty of 2.5% of the amount in default, calculated monthly and not to be compounded. This penalty may be charged, required or accepted only once in a 30-day period.
s. 15.4(1) Reg 50/2010

Despite subsection (1), a payday lender must not charge, require or accept any penalty or other amount in relation to a default by a borrower under a replacement loan.
s. 15.4(2) Reg 50/2010

In addition to any penalty that may be charged under section 15.4(1) of the Regulation, if a payday lender is charged a fee for a cheque, pre-authorized debit or other negotiable instrument that is dishonoured or if a stop payment order is placed, the payday lender may charge the borrower the amount of that fee by way of reimbursement, to a maximum of $20.00.
s.15.5 and 15.7(1)(2) Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What are the consequences if I charge more than the allowable amount to a borrower in default?

If a payday lender charges a borrower more than the allowable amount as permitted by regulation

  1. a borrower is not liable for any amount charged in relation to his or her default under the payday loan; and
  2. the lender must immediately reimburse the borrower, in cash, upon demand by the borrower or the director, for any amount paid by the borrower in respect of that default.

This is in addition to any penalty that the lender may be subject to under any other provision of this Act or the regulations.
s. 153(2) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Can a borrower prepay a loan?

Yes, a borrower is entitled to prepay the outstanding balance under a credit agreement, including a payday loan, at anytime without charge or penalty. Each payday loan agreement must include a statement that notifies the borrower of this right, and that also informs the borrower that they may make partial prepayments without charge or penalty on any scheduled payment date.
s. 18 to 20 and s. 34.3(m) Act

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Can a borrower cancel a payday loan?

A borrower may cancel a payday loan within 48 hours, excluding Sundays and other holidays, after receiving the initial advance or cash card or other device enabling the borrower to access funds under the loan.
s. 149(1) Act

A borrower may also cancel a payday loan at any time if the payday lender did not notify the borrower of his or her right to cancel the loan within 48 hours or if notice of the right to cancel does not meet the requirements of s. 148 of the Act (see question 13).
s. 149(2) Act

The definition of payday lender includes an employee or officer of the payday lender at the location at which the payday loan was arranged or provided as it applies to subsections 149(4) and 149(5) of the Act.
s. 149(3) Act

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What happens if a borrower cancels a payday loan?

The borrower must repay the outstanding balance of the initial advance, less any cost of credit that was paid by or on behalf of the borrower or deducted or withheld from the initial advance.
s. 149(4)(b) Act

The lender must then immediately give the borrower a receipt, in the form required by s. 148 of the Act, for what the borrower paid or returned to the payday lender upon cancelling the loan.
s. 149(6) Act

No payday lender shall charge, or require or accept the payment of, or arrange for or permit any other person to charge, or to require or accept the payment of, any amount or consideration for or as a consequence of, the cancellation of a payday loan.
s. 149(8) Act

Upon cancellation, the lender must immediately reimburse the borrower, in cash, all amounts paid and the value of any consideration given as a cost of credit for the loan, less any amount deducted or withheld from the initial advance or from the repayment of it.
s. 149(9) Act

A borrower may give cancellation notice to an employee or officer of the payday lender.
s. 149(3) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Can I take security for the payment of a payday loan or the performance of an obligation under the loan agreement?

A payday lender cannot require, take or accept:

  • real or personal property
  • an interest in real or personal property
  • a guarantee

as security for the payment of a payday loan or the performance of an obligation under a payday loan agreement. A post dated cheque or pre-authorized debit is not considered to be security.
s. 150 Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Can I have a borrower sign a wage assignment?

A payday lender cannot request or require a person to make an assignment of wages in relation to a payday loan.
s. 151(2) Act

An assignment of wages is not valid if 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.
s. 151(1) Act

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What if I want to do credit checks or verify employment?

If a payday lender wishes to conduct credit checks, verify employment or complete any other personal investigations as defined under The Personal Investigations Act they must disclose this to the borrower in writing in the payday loan agreement and obtain the borrowers written consent on the payday loan agreement prior to conducting any personal investigations. Despite section 7 of the Personal Investigations Regulation Manitoba, the consent must be given in writing, including by electronic means, but not orally.
s. 14.2 Reg 50/2010

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What kind of records and information am I required to keep? How long do I have to keep the records?

A payday lender must maintain records including records of all payday loans that it offers, arranges or provides, and all payday loan agreements that it enters into.
s. 157 Act

The records must be complete and accurate to enable the following to be determined and verified:

  • the particulars of each payday loan agreement entered into, including the information required by s.14 of the Payday Loans Regulation
  • the amount of each fee, charge, penalty, interest and other amount or consideration charged, required or accepted in relation to each payday loan
  • the number of payday loans and replacement loans that the payday lender offers, arranges or provides within a time period specified by the director
  • the particulars about the payday lender’s collection practices in respect of each payday loan, including a communications log of each contact, or attempted contact with each borrower
  • the payday lender’s compliance with the Payday Loans Part, the regulations and the terms and conditions of its licence
    s. 17(1) Reg 50/2010

A payday lender must maintain records, including records of all payday loans that it offers, arranges or provides, and all payday loan agreements it enters into, for at least two years from the date the loan was offered, arranged or provided, or the agreement was entered into.
s. 17(2) Reg

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Does the Consumer Protection Office have the right to require information from a payday lender?

Yes. A Consumer Protection Officer has the right to inspect lenders and to require information as part of that inspection. The payday lender or person in charge of the place being inspected or having custody or control of the relevant records must:

  1. produce or make available to the inspector all records and property that the inspector requires for the inspection;
  2. provide any assistance or additional information, including personal information, that the inspector reasonably requires to perform the inspection; and
  3. upon request, provide written answers to questions asked by the inspector.
    s. 159(4) Act

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Can I process a borrower’s cheque or pre-authorized debit more than once?

A payday lender may present a cheque, pre-authorized debit or other negotiable instrument that the borrower provided in exchange for the advance of money to a financial institution only once.
s. 15.7(1) Reg 50/2010

Despite subsection (1), a payday lender may present a cheque, pre-authorized debit or other negotiable instrument to a financial institution more than once, but only if

  1. the borrower is not charged a fee, penalty or other amount by the financial institution to process it; and
  2. in circumstances where the payday lender is charged a fee, penalty or other amount by the financial institution to process it, the lender does not in turn charge a fee to the borrower under section 15.5.
    s. 15.7(2) Reg 50/2010

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What are other restrictions placed on the activities of payday lenders?

Restricted Payday lending activities

A payday lender must not

  1. accept a cheque, pre-authorized debit or other negotiable instrument from a borrower unless it is made payable to the payday lender;
  2. require that the term of a payday loan ends before the day on which the borrower is next regularly due to receive income;
  3. make or attempt to make any unauthorized withdrawals from a borrower's account with a financial institution;
  4. disclose any information about the payday loan or the fact that the borrower has a payday loan to any person other than the borrower, unless
    1. the borrower gives his or her written and informed consent to the disclosure,
    2. the disclosure is to a personal reporting agency, as defined in The Personal Investigations Act,
    3. the disclosure is to a collection agent with whom the payday lender has contracted to collect a debt owing under the payday loan, or
    4. the disclosure is required by law;
  5. state or imply that entering into a payday loan agreement will improve the borrower's personal credit rating if that is not accurate or correct; or
  6. give, offer to give, or promise to give — directly or indirectly — any prize or reward
    1. as an incentive or enticement to enter into a payday loan agreement, or
    2. for entering into a payday loan agreement.
      s.15.6(1) Reg 50/2010

This is not a comprehensive list of all restrictions on payday lender operations, payday lenders should consult the legislation and their legal counsel for further details.

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Are there requirements for what information I must post in each location, on websites that offer payday loans, and information I must disclose to borrowers completing a payday loan transaction over the telephone?

A payday lender must post signs at each location at which the lender offers, arranges, or provides payday loans. The signs must be posted prominently and in accordance with the regulations, and must clearly and understandably set out, in the form required by the regulations.
s. 156 Act

  1. a sign measuring not less than 61 cm in width and 76 cm in height that is visible to borrowers immediately upon entering the location, and that contains the information set out in subsection (2) in the following font sizes:
    1. the information required under clause (2)(a) must be shown in not less than 110-point type,
    2. the information required under clauses (2)(b) to (d) must be shown in not less than 72-point type,
    3. the information required under clause (2)(e) must be shown in not less than 54-point type; and
  2. a sign that is visible to borrowers at each place within that location where payday loans are negotiated, and that contains the information set out in subsection (2) in not less than 28-point type and in a colour that contrasts with the background.

Required information

16(2) Only the following content is to appear on a sign referred to in subsection (1):

  1. at the top of the sign, the following statement:
    "Payday Loans are High-Cost Loans";
  2. after the statement referred to in clause (a), the following statement:
    "In Manitoba, the maximum allowable charge for a payday loan is 17% of the principal amount of the loan."
  3. after the statement referred to in clause (b), the following statement:
    "Sample $300 loan for 12 days:"
  4. on a separate indented line, the following statements and amounts in the order listed:
    • "Total cost of credit =" followed by the total cost of credit for a $300 loan for 12 days;
    • "The Annual Percentage Rate (APR)" followed by the APR for a $300 loan for 12 days;
    • "The total that must be repaid is" followed by the amount to be repaid for a $300 loan for 12 days;
  5. at the bottom of the sign,
    1. the following statement: "This information meets the requirements of The Consumer Protection Act", and
    2. the payday lender's licence number for that location.

Internet payday loans

16.1(1) A payday lender who offers, arranges or provides Internet payday loans must display a notice that contains the content required under subsection 16(2) displayed in a clear and understandable manner, and in a font colour that contrasts with a white background and purple border.

Notice

16.1(2) The notice referred to in subsection (1) must be made visible to borrowers

  1. at or near the top of the introductory page of the website for Manitoba borrowers; and
  2. in a location on the website that comes before the payday loan application.

A payday lender who offers, arranges or provides payday loans by telephone must provide an oral statement of the content set out in subsection 16(2), the name of the payday lender as shown on its licence, and its licence number to the borrower in a clear and understandable manner before the borrower enters into the payday loan agreement.
s. 16.2(1) Reg 50/2010

Sections 16(1)(2) Reg, 16.1(1)(2), 16.2(1)(2) Reg 50/2010 contain the specific requirements for signage as required by s. 156 of the Act.

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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Are there requirements for payday loan advertisements?

Payday lenders must ensure that its advertising in relation to payday loans, including advertisements on radio and television, includes the following statement:

"To learn more about your rights as a payday loan borrower, contact the Consumer Protection Office at 204-945-3800 or 1-800-782-0067 or at www.manitoba.ca/cca/cpo"

s. 18.2 Reg 50/2010

Non-compliance with this part may result in notice of an administrative penalty. A list of issued administrative penalties will be published on the Consumer Protection Office website.

For more information regarding administrative penalties refer to Question 38 of this document.

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What are the consequences of non-compliance with the Act and Regulations?

The following are the provisions for which a notice of administrative penalty may be issued.

19(1) A notice of administrative penalty may be issued under subsection 136(1) of the Act if a person fails to comply with any of the following provisions of the Act:

  1. subsection 139(1) (licence required to provide payday loans);
  2. subsection 139(2) (use of name);
  3. subsection 141(1) (licence not transferable or assignable);
  4. subsection 147(1) (limit re cost of credit);
  5. clause 147(2)(b) (reimbursement);
  6. section 148 (documents to be given at time of initial advance);
  7. subsection 149(6) (payday lender to give receipt);
  8. subsection 149(8) (no fee on cancellation);
  9. subsection 149(9) (refund to borrower on cancellation of loan);
  10. section 150 (no security to be taken);
  11. subsection 151(2) (requesting or requiring wage assignments prohibited);
  12. subsection 151.1(1) (maximum amount of loan);
  13. subsection 152(1) (limit on charges for extension, renewal or for replacement loan);
  14. clause 152(2)(b) (reimbursement);
  15. subsection 153(1) (limit to amounts payable for default);
  16. clause 153(2)(b) (reimbursement);
  17. subsection 154(1) (concurrent loans prohibited);
  18. clause 154(2)(b) (reimbursement);
  19. section 156 (information to be posted);
  20. section 157 (records to be kept);
  21. section 158 (records to be made available for inspection);
  22. subsection 159(4) (assistance to officer or authorized person).

19(1.1) A notice of administrative penalty may be issued under subsection 136(1) of the Act if a person fails to comply with any of the following provisions of this regulation:

  1. subsection 14.0.1(1) (Internet payday loan agreements);
  2. subsection 14.0.1(2) (borrower must be able to print agreement);
  3. subsection 14.0.1(3)(consent to enter an Internet payday loan agreement);
  4. subsection 14.1(5) (first copy free);
  5. subsection 15.6(1) (restricted payday lending activities);
  6. subsection 15.7(1) (no repeated attempts to process repayment);
  7. subsection 16.1(1) (Internet payday loans);
  8. section 18.2 (advertising in relation to payday loans).

19(2) The amount of an administrative penalty is as follows:

  1. first contravention $1,000
  2. second contravention $3,000
  3. third or subsequent contravention $5,000

s. 19(1) Reg, 19(1.1), and 19(1.2) Reg 50/2010

A list of issued administrative penalties will be published on the Consumer Protection Office website. See Administrative Penalties for more information regarding administrative penalties.

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Is there other consumer protection legislation that applies to payday loans?

Business operators should be familiar with all municipal, provincial and federal laws. BizPal is an online service that can help find information on required licenses and permits for all levels of government in Manitoba.

The Business Practices Act (BPA), administered by the Consumer Protection Office, applies to all businesses The legislation provides that it is an unfair business practice for a business (including a payday lender) to do or say anything if, as a result, a consumer might reasonably be deceived or misled; or to make a false claim. The BPA contains penalty provisions as follows:

Any person who:

  1. contravenes or fails to observe a provision of this Act or the regulations or an order of the director; or
  2. fails to observe any provision of an assurance given under section 20; or
  3. fails or refuses to furnish information as required under this Act; or
  4. gives false or misleading information to a person acting under this Act;

is guilty of an offence and liable, on summary conviction,

  1. if an individual, to a fine of not more than $25,000 or imprisonment for a term of not more than 12 months or both in the case of a first offence, and to a fine of not more than $100,000 or imprisonment for a term of not more than 36 months or both in the case of a second or subsequent offence; and
  2. if a corporation, to a fine of not more than $100,000 in the case of a first offence, and to a fine of not more than $1,000,000 in the case of a second or subsequent offence;

and, in addition, may be ordered, at the time the penalty is imposed, to pay to any consumer affected by the offence such amount by way of compensation for loss or damage as the judge imposing the penalty may determine.
s. 33(1) BPA

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Where can I get more information regarding the requirements for payday lenders?

Consumer Protection Office
302-258 Portage Avenue
Winnipeg, Manitoba R3C 0B6

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