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Cash lender sues 26 borrowers

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Court summons were issued for 26 people on a single day after they racked up thousands of dollars worth of debts to an unlicensed fast-cash lender.

Lawyers for Caribcash Bermuda filed a string of writs against people who it was claimed had defaulted on loans dating back to December 2016.

The amounts owed ranged from about $400 to almost $25,300 and came after borrowers were said to have failed to make monthly repayments of up to $1,180.

Caribcash Bermuda said that since the summonses were issued last month, 21 of the people had contacted either the company or its lawyers, Carey Olsen, to resume efforts to settle their accounts, which would halt court proceedings.

The Ministry of Home Affairs urged the public to think before they entered into loan agreements.

Caribcash Bermuda explained on its website that it offered consumer loans and debt consolidation up to $25,000.

Taiwo Ogunyemi, a director and business development manager at the company, said the firm was an affiliate of the Fastcash Caribbean Group.

Mr Ogunyemi added that the business was successful in the eastern Caribbean and added: “We have brought it to Bermuda to help the economy because we know there's very much a need out there.”

The former head of business banking at Butterfield Bank said that in “robust” economies, several finance options were available, but in Bermuda the market was limited to banks.

He added: “Caribcash comes in to help with that void.

“Maybe the banks don't have the appetite — especially in a recession — to lend, and they restrict their terms. We're able to provide funding.

“The Caribcash that you see is not just a fly-by-night — it's part of an organisation with established procedures and established practices in different jurisdictions.”

Mr Ogunyemi said the lending process was “very structured, like a bank” with “comprehensive” steps for compliance — such as provision of payslips and bank statements — to ensure that customers have the ability to repay.

The company's website said: “Days? Weeks? Months? Not here! We live up to our name with same day approvals and get you fast cash in as little as two hours once all requirements are met! Let's get you yours now!” It added: “We give access to your cash in as little as two hours.”

Mr Ogunyemi said that the risk lay with the company because the loans were not secured against assets.

He added: “The majority of our loans go to responsible borrowers who need liquidity for the events life deals them, like medical needs, education, construction and other unanticipated expenses. We are there to help our customers in all instances.”

Mr Ogunyemi pointed out that he would “love” the company, which has an office on Victoria Street, to be licensed but said the Bermuda Monetary Authority did not have a suitable classification under its Money Service Business licence.

But he said: “We are, however, registered with the BMA as a non-licensed person under their anti-money laundering and antiterrorist financing supervision and enforcement.”

The 26 summonses were published on the Offshore Alert website and alleged customers had promised to pay sums of money with monthly interest rates set at between 1 and 1.25 per cent.

They claimed that payments were to be made in monthly instalments — ranging from almost $200 to about $1,180 — but that the individuals had failed to do so on a certain date, sometimes within three months of the agreement.

The writs added that the defendants agreed if they failed to make payments and did not rectify within a week, the company could “declare the whole amount ... then outstanding to be immediately paid”.

Mr Ogunyemi said the annual percentage rate of interest — known as APR — was between 22.3 per cent and 31.2 per cent and the company had to “charge a premium for the risk involved”.

The APR on a credit card, among the highest rates of interest charged by banks, is set at 19.95 per cent on a typical personal card at HSBC.

One of the borrowers last week said that Caribcash Bermuda had twice changed the account into which repayments were made and that the company could have made it easier for customers to monitor their accounts.

The 38-year-old added: “I knew I had the payments, I knew I was responsible but I didn't have any communication from them.”

She admitted she had been sent e-mails but added: “A registered letter would have been fine, something more formal to say, ‘this hasn't been paid in a while, can you give us a call?'.”

“With a lending facility I expect better, as far as dealing with your clients.”

The woman said she appreciated the help she has since received from Carey Olsen and agreed with the lawyers to have the money repaid by the end of June.

Mr Ogunyemi confirmed that there had been “initial changes” to the collection accounts before the company settled with a local bank last June and that customers were assisted through the adjustment.

He added: “Any missed repayments during the account transitioning period were not taken into account or used in the determination of delinquency.”

He also explained that the company provided balance statements on request and an app allowed customers to check the status of their accounts.

Mr Ogunyemi added that correspondence was sent by registered mail “where required”.

He said borrowers signed contracts that set out rates, fees and the company's rights to seek repayment in a clear way and that the legal action came after “proper processes” were followed.

He added: “The last thing we want to do is go down the collections route, but when all else fails and there's no response, we have to try to collect that debt and that's exactly what the banks do.”

The firm explained that communication after a missed payment could include a telephone call, e-mail, letters from the company then its lawyers and it was after those options were exhausted that legal action was taken.

A Ministry of Home Affairs spokeswoman declined to comment on specific cases.

But she said that loan arrangements were “governed by the terms and conditions found within the loan contract”.

She said earlier this month: “Caveat emptor — ‘let the buyer beware' — is one of the key elements of consumer law.

“Businesses are generally free to do whatever is not explicitly prohibited by law.”

The spokeswoman advised potential borrowers to consider the complete costs, including fees and interest, how interest was calculated and when it started to be charged, as well as the minimum monthly payments.

She said: “Do not borrow more than you can repay. Understand your loan agreement before you sign it. Make your payments in full and on time.”

The spokeswoman added: “Keep records in case questions arise about your loan agreement or repayments.”

She said that the Government had highlighted concerns about predatory lending practices in last year's Throne Speech and that its consumer team would work with the BMA to develop a consumer protection Bill — similar to the Debt Collection Act 2018 — “devoted to much needed transparency and equitable treatment of consumers who use banking and insurance services”.

Consumer loan operator: CaribCash (Photograph by Blaire Simmons)
Taiwo Ogunyemi, a director at CaribCash Bermuda (Photograph from company website)

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Published May 27, 2019 at 9:00 am (Updated May 27, 2019 at 7:15 am)

Cash lender sues 26 borrowers

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