Cash Converters to face pay-day lending class action claims
10 October 2013
Australia's biggest payday lender, Cash Converters, is at the centre of claims it has illegally exploited thousands of financially struggling Australians by imposing charges that far exceed the legal interest limits.
Ben Slade, NSW Managing Principal of Maurice Blackburn Lawyers, says that despite laws in NSW capping interest rates at 48 per cent on consumer credit, Cash Converters borrowers have paid exorbitant interest up to as high as 633 per cent.
"Those doing it toughest, living hand to mouth, have been hung out to dry by Cash Converters, so today we will commence two class actions against the company, claiming around $40million in compensation for about 50,000 NSW citizens," Mr Slade said.
Miranda Nagy, Maurice Blackburn Special Counsel who is also working on the case, says Cash Converters contrived to avoid the interest rate cap in NSW by having borrowers sign a separate document that committed them to repaying their loans early and incurring huge additional fees.
"This practice was deliberate, systemic and unconscionable - a callous exploitation of some of the most vulnerable in our community, preying on people already facing financial difficulty by ensuring they took on a further burden," Ms Nagy said.
"Forget the happy pictures in their advertisements of people walking out flush with cash - the reality is that desperate people ended up in a cycle of debt while Cash Converters' profits continued to increase."
Julie Gray, pensioner and grandmother of Cambridge Park, NSW, is heading the class actions as the lead plaintiff.
"I could not believe how much Cash Converters managed to make me pay for their short term loans," Ms Gray said.
"I was desperate and needed cash to get by, but Cash Converters took advantage of me like they take advantage of lots of people. Someone has to stand up and make this company accountable."
Cash Converters operates a global network of over 700 stores across 21 countries, with around 150 Cash Converters stores in Australia. This action is for NSW customers only. The class actions will be run as an open class action, meaning everyone in NSW who had a Cash Converters short-term loan from July 2010 until the consumer lending laws changed in July 2013 is automatically included in the claim.