Voluntariness of Payments May be Weak Link in Certifying Usury Class Actions

A recent decision of the Ontario Divisional Court may make it more difficult to certify class actions against financial institutions for usury. The Court held that, as the voluntariness of each individual payment was relevant to the issue of whether interest charges constituted usury, a class action may not be the preferable procedure for the determination of such claims.

In Markson v. MBNA Canada Bank,¹ one of MBNA's cardholders attempted to certify a class action proceeding based on the allegation that MBNA received interest on credit card cash advances in violation of the usury provisions of the Criminal Code.² Markson brought this certification motion after he withdrew a cash advance on his credit card which he paid back one week later. Markson claimed that since the amount of the interest charged on his cash advance, along with the transaction and service fees, was greater that 60% per annum, MBNA had violated the usury provisions of the Criminal Code.