Cash Converters faces $40m class action over fees
Law firm Maurice Blackburn is set to initiate a class action in the Federal Court alleging thousands of customers were caught out by the high charges.
The firm alleged Cash Converters borrowers paid interest rates to the equivalent of 633 per cent on some loans, despite laws in NSW capping rates at 48 per cent. The cap also applies in Victoria and Queensland.
The company did not comment on the claim, but said its loan products complied with all state laws.
Maurice Blackburn NSW managing principal Ben Slade said the firm would initiate two class actions, seeking about $40 million compensation on behalf of 50,000 customers. The action only applies to NSW customers.
Last month Cash Converters posted a 12 per cent lift in full-year profit to $32.9 million. Earnings from personal loans represent the largest proportion of its business.
"Those doing it toughest, living hand to mouth, have been hung out to dry by Cash Converters," Mr Slade said.
Also known as a short-term lender, financiers such as Cash Converters typically provide loans of between $200 and $2000 that must be repaid within a short period of time, such as by the borrower's next payday.
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The class action alleges short-term lender Cash Converters forced customers to pay loan charges that exceeded a legal cap on interest rates. Law firm Maurice Blackburn says thousands of borrowers were caught out by high charges, with some loans allegedly equivalent to 633% interest despite state caps.
Maurice Blackburn is reported to be initiating two class actions seeking about $40 million in compensation on behalf of roughly 50,000 customers, according to the article.
The article says law firm Maurice Blackburn is set to initiate the class actions. Maurice Blackburn’s NSW managing principal Ben Slade is quoted about the alleged conduct and the planned claims.
The article states the action only applies to customers in New South Wales (NSW). Maurice Blackburn says the claims relate to thousands of customers, with the wider figure for the two actions about 50,000 people.
Maurice Blackburn alleges some borrowers paid rates equivalent to 633% on certain loans, while state laws cap rates at 48% in NSW. The article also notes the same cap applies in Victoria and Queensland.
According to the article, Cash Converters did not comment directly on the claim but said its loan products complied with all state laws.
The article reports that personal loans represent the largest proportion of Cash Converters’ business. It also notes the company posted a 12% lift in full-year profit to $32.9 million.
The article describes short-term lenders as typically providing loans between $200 and $2,000 that must be repaid within a short period, such as by the borrower’s next payday. Maurice Blackburn’s commentary highlights concerns about high charges on those kinds of loans.
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