Soon, new laws in Alberta and Saskatchewan will prevent brokers from charging fees in advance of securing loans.
The laws were prompted by scam artists from Ontario who use prairie addresses and phone numbers to bilk mainly American consumers out of application fees.
Rob Phillips, director of consumer programs with Alberta Municipal Affairs, said the RCMP has broken up several schemes where businesses had no intention of loaning money.
They convinced applicants who phoned that they would receive money as soon as they mailed an application fee.
Read Also
Going beyond “Resistant” on crop seed labels
Variety resistance is getting more specific on crop disease pathogens, but that information must be conveyed in a way that actually helps producers make rotation decisions.
In September, the province’s new Fair Trading Act will let the department fine people who charge advance fees.
Phillips noted he has not received any complaints from prairie farmers about the practice.
In Saskatchewan, revamped trust and loan legislation will mean loan brokers have to register with the government, provide a bond and follow certain regulations.
Jim Hall, superintendent of financial institutions, said the handful of loan brokers in the province get a disproportionate number of complaints called in to his office.
Most of the complaints come from people who paid advance fees but didn’t get loans. However, most of them received notice in writing that the non-refundable fees didn’t guarantee loans.
“They’re perhaps more vulnerable, more likely to take a chance on something,” said Hall. “If you’re at your wit’s end, maybe you’d try anything.”
Complaints on brokers
Hall receives about eight complaints per broker per year compared to less than one complaint per trust, loan or insurance company per year.
Anne Lorenzen, of Saskatchewan Justice’s consumer protection branch, said she suspects some people have avoided complaining because they are embarrassed about their financial situation.
But Lorenzen noted it’s important not to tar all brokers with the same brush. Brokers incur costs trying to find applicants loans, even when they’re not successful.
The new law may mean legitimate brokers will have to charge higher fees to people who qualify for loans, said Lorenzen.
In Manitoba, the Business Practises Act makes it easier to shut down scam artists, said Aurele Robert of the consumer and corporate affairs department.
Brokers can charge non-refundable advance fees as long as they tell applicants there’s no guarantee of a loan.
But Robert said the practice is uncommon because consumers won’t pay the fees.
“The market is keeping them honest,” said Robert, adding he receives few complaints about brokers.
