Cash Converters borrowers get early class action payday
18 June 2015
A $23 million in-principle settlement has been secured by Australia’s leading class action team at Maurice Blackburn Lawyers, for around 37,500 New South Wales Cash Converters customers after they were charged up to 633 per cent interest on short-term loans.
Ben Slade, NSW Managing Principal of Maurice Blackburn Lawyers, said that while the settlement is subject to approval by the Federal Court and is without admission of liability, it signals a significant victory for thousands of people that would have had no other way to stand up to such injustice.
“This settlement is an excellent outcome for thousands of people who are doing it tough and who shouldn’t have been taken advantage of,” Mr Slade said.
“We expect that Cash Converters’ borrowers in NSW will receive a full refund of the overpayment, plus interest.”
Miranda Nagy, Maurice Blackburn Special Counsel said the case was a prime example of how class actions can help the most vulnerable get real access to justice.
“None of these people, on their own, could have taken on Cash Converters. It is because we have an efficient and effective class actions regime that they are able to join forces and stand up to large organisations to change corporate behaviour for the better,” Ms Nagy said.
The class actions include everyone in NSW who had a Cash Converters short-term loan from July 2010 until the consumer lending laws changed in July 2013. It was alleged that Cash Converters avoided the 48 per cent interest rate cap in NSW by having borrowers sign a separate document that committed them to repaying their loans early and incurred a hefty “deferred establishment fee”.
The fee, when included in calculation of the annual interest rate, saw the actual interest rate soar from 48 per cent to 633 per cent on one-month cash advance loans and 145 per cent on seven-month loans.
The cases were to go to trial in early July, with Cambridge Park pensioner and grandmother Julie Gray as the lead plaintiff.
“It has been a long and tough battle, but today I’m delighted that Cash Converters has agreed to pay us back. I couldn’t believe how much Cash Converters charged me and how easily it led to a dangerous debt cycle,” Ms Gray said.