Judge dismisses collection company's application for default on 45% loan

Photo: Halina Beaulieu

Salmon Arm courthouse.

A judge slammed a debt collection company and dismissed its application for a default order on a payday loan that charged almost 45% interest.

In a B.C. provincial court decision issued Jan. 18 in Salmon Arm, Judge Jeremy Guild blasted EOS Canada, which had attempted to collect on the $10,700 loan issued in September 2018.

Easyfinancial Services loaned Lee Young and Tammy Law, $10,701.45 at an interest rate of 44.96%.

No payments were made on the loan after July 1, 2019, however it wasn't until Nov. 22 that efS considered that the two had defaulted.

It assigned the debt collection to EOS, which has since changed its name to Transworld Systems Canada Inc.

EOS waited until Oct. 7, 2021, to file a notice of claim, including interest up to that date. No reply to the claim was filed, and on Sept. 21, 2022, EOS filed an application for a default hearing.

Guild dismissed EOS' claim, blasting the length of time it took to pursue the money, allowing interest to accrue at the sky-high rate.

"There were significant delays by EOS in pursuing the debt and the claim. There were a number of significant periods where nothing was done to pursue collection. For example, upon registered mail addressed to Lee Young being returned to EOS marked “Refused”, a process server was not engaged until about four months later. An EOS representative was apparently able to fairly quickly locate a Facebook account for Lee Young that became the means of alternate service," the judge wrote.

"When it became clear it was difficult to find Lee Young, no request for substitutional service was made for several more months. I am not criticizing EOS' business practices. They are free to take as much time as they wish and conduct their business as they see fit. The issue is that EOS claimed interest was payable ... during all those unexplained delays at the rate of $9.36 per day."

Guild continued: "Given the purpose of the Small Claims Act is to have speedy, just and inexpensive resolutions to claims, it seems inconsistent to permit such interest to be payable where little was done, to the detriment of the debtor."

The judge found no proof EOS was even licensed to operate in B.C.

"EOS has failed to show that. Its claim could be dismissed on that basis alone, but there are further problems," wrote Guild.

Those included no proof of assignment of the debt to EOS, no evidence the demand letters were ever sent or received, and that the notice was only made out to Young and not Law.

The loan was to be divided between a joint account and home and auto benefit plan, however only Law apparently signed and was aware of $3,043.96 going to a prepaid credit card solely in her name.

The loan was to be repaid by preauthorized payment from the joint account.