Berwyn, PA: Dollar Financial Corp, an international financial services company serving unbanked and under-banked consumers, announced today that it has reached an agreement to settle its British Columbia class action litigation, in which the plaintiffs claimed that the business model used by the Company's Canadian subsidiary, National Money Mart Company (NMMC), resulted in the collection of fees in excess of the statutory limit for payday loans made since 1997.
Under the summary terms of the British Columbia settlement, the Company will create a settlement fund in an amount of C$24.75 million, consisting of C$12.375 million in cash and C$12.375 million in vouchers. Fees payable to plaintiffs' counsel will be paid from this fund. The remaining amount of the fund will be available to class members who make claims, with the Company receiving a credit for any unpaid debts incurred through November 1, 2009 and owed by claimants to the Company. As part of the settlement, the Company will release all debts incurred through November 1, 2009 by class members who do not make a claim, up to the total check cashing fees paid by those class members through that date.
The vouchers will be in paper form, will not be transferable, will be subject to cash redemption for six months after their three-year life, and will be available to be applied during the three years generally in C$5.00 increments to product transactions on most of NMMC's products. Any amounts remaining in the settlement fund after the redemption period will be returned to NMMC.
The British Columbia settlement will be set forth in a definitive settlement agreement which will be subject to final court approval. The Company expects final settlement approval by June 30, 2010, although there can be no assurances in that regard. The Company expects to record a charge of C$12.375 million associated with the cash component of the settlement fund, and an additional non-cash amount that will be based on the expected value of the vouchers.
