Two class actions by Maurice Blackburn commenced in the Federal Court of Australia seeking compensation for Queensland borrowers who took out payday loans from Cash Converters stores or online. The case concerning ‘Personal Loans’ in the period between 30 July 2009 and 30 June 2013 ('Personal Loans Class Action') has been to trial and is awaiting judgment. The second case concerning ‘Cash Advances’ between 28 April 2010 and 30 June 2013 ('Cash Advance Class Action') has now settled.
Settlement of the Cash Converters Queensland “Cash Advances” Class Action
Kim McKenzie v Cash Converters International Limited (NSD 601 of 2016)
The Federal Court of Australia approved the settlement between Kim McKenzie and Cash Converters, at a hearing held on 31 January 2019. Maurice Blackburn has been appointed by the Court to act as Claims Administrator, by responding to group member enquiries and paying refunds to all eligible group members.
The Federal Court of Australia has ordered the publication of the Notice of Settlement to Group Members in the Cash Converters Qld “Cash Advances” Class Action. Group Members were sent the Notice of Settlement by email or post on 12 and 13 December 2018.
The Notice of Settlement explained important information about the settlement and the payment to be made to Group Members.
Further information about the settlement of the Qld Cash Advances Cash Converters Class Actions
1. Who are the Group Members in the class actions?
In the class action, the Group Members are people who obtained a Cash Advance loan (whether online or by going into a store) between 28 April 2010 and 30 June 2013 where Cash Converters (Cash Advance) Pty Ltd, Cash Converters (Stores) Pty Ltd or Bak Property Pty Ltd was the lender, and who paid a fee styled as a ‘broker’s’ fee or a ‘brokerage’ fee to a company that was owned by Cash Converters International Limited.
Pawnbroking loans or other services from Cash Converters, including Personal Loans, are not included in this class action settlement. Information about the Personal Loans class action (which has not settled) is available here. Loans given at stores in the Australian Capital Territory or to persons who were resident in the Australian Capital Territory are also not included in this class action settlement.
2. Legal consequences of the settlement
Group Members’ legal rights are affected by the settlement. As the Court has approved the settlement, all Group Members, including any who have declined to receive a refund, are bound by the settlement and at the end of the administration period all Group Members will be deemed to have provided releases to Cash Converters that arise out of the matters the subject of the class action which concern conduct prior to 1 July 2013 including, all orders for costs in the class action.
3. Who will be eligible to receive compensation?
Approximately 29,758 people will be eligible to receive compensation. Group Members must have paid a fee called a ‘brokerage’ fee (sometimes also referred to as a ‘broker’s fee’) to be eligible for compensation. Group Members may not be aware that they paid a ’brokerage’ fee as the amount of that fee would have been included in the total principal of the “Cash Advance”.
4. When will compensation be paid?
The earliest that compensation can be paid is 42 days after the Court approved the settlement. This is late March 2019. However, please note that, given the number of Group Members in the class action (approximately 29,000), this process may take some time. The payment may be made in more than one instalment.
5. Summary of key terms of the settlement
The Federal Court approved the settlement on 31 January 2019. The key terms are:
- Cash Converters will pay $10.6 million to be distributed to Group Members.
- Cash Converters will pay $5.8 million to Maurice Blackburn for legal fees and the costs of distributing the settlement.
- Group Members will receive a refund calculated on the basis of the ‘brokerage’ fee paid. The amount of the payment will be calculated on a pro rata basis and will depend upon the number of Group Members for whom correct bank account details are held (or provided) and who can therefore be successfully paid. Therefore, the exact amount of the refund cannot be determined now.
- Cash Converters has provided to Maurice Blackburn information about Group Members, including loan details and bank account details, to administer the settlement. The Notice of Settlement sent to each Group Member identifies the bank account details held for the Group Member. If the bank details on the Settlement Notice are incorrect, Group Members can update this themselves by accessing the link on page 2 of their Settlement Notice. If they need to update their mobile number in order to access the link, they can contact Maurice Blackburn on 1800 550 587.
- Group Members can decline to receive a refund if they wish.
- Maurice Blackburn will attempt to pay all Group Members with the bank account details provided by Cash Converters or provided by Group Members. If any bank account details are incorrect, Maurice Blackburn may (but is not required to) try to find Group Members whose payments failed, and such Group Members may miss out on receiving any compensation.
- After the administration period has ended, Ms McKenzie and Group Members will be deemed to have provided releases to Cash Converters for all claims and liabilities that arise out of the matters the subject of the class action which concern conduct prior to 1 July 2013 including, all orders for costs in the class action.
6. The claims in the class actions
In April 2016 Maurice Blackburn's client Kim McKenzie, commenced a class action against Cash Converters International Limited and related companies on behalf of people who obtained loans through Cash Converters in Qld in the form of 'Cash Advances'. The case was also brought against lender companies that were owned by Cash Converters International Limited, being Cash Converters (Cash Advance) Pty Ltd, Cash Converters (Stores) Pty Ltd and Bak Property Pty Ltd. Ms McKenzie alleged that Cash Converters had a business system whereby borrowers would be charged a ‘Brokerage Fee’ comprising 35% of the principal amount of their Cash Advance.
As a result, Ms McKenzie sought compensation for the payment of the ‘Brokerage Fee’, and interest, on behalf of Group Members in the class actions.
The Cash Converters respondents denied the claims made against them.
In agreeing to settle the claims, Cash Converters did not admit liability.
7. How can the statement of claim and other legal documents be obtained?
Download the documents here:
Second Further Amended Statement of Claim
Further Amended Defence
Should you wish to obtain further information or a copy of the Deed of Settlement, please contact Maurice Blackburn at the contact details below.
8. Court approval hearing – 31 January 2019
On 31 January 2019, the Federal Court of Australia approved the settlement.
No Group Member opposed the settlement or chose to opt out.
9. Steps required to participate in the settlement
Provided that Group Members’ bank account details known to Cash Converters are correct, they do not need to take any active steps to participate in the settlement as payment will be made into that bank account.
10. The bank details on the Notice are wrong. How do I update them?
The Notice of Settlement provided that bank details must be updated by 29 January 2019. If you have received a Notice of Settlement and your bank details are incorrect but you did not update them before 29 January 2019, please contact Maurice Blackburn on 1800 550 587. 11. Opting out of the settlement
The opt out period for the class action ended on 1 October 2018 and there is no current provision to opt out of the action under the settlement. Persons who opted out before the opt out date will be excluded from receiving a refund payment under the settlement. Group Members who opted out will not be paid any compensation pursuant to the settlement.
12. Personal information
The information Maurice Blackburn receives from Cash Converters or Group Members will only be used for the purpose of paying the refund or contacting a Group Member to obtain updated account details.
13. Further information
If there is anything you do not understand or if you have any questions, do not contact the Federal Court or Cash Converters. You may seek independent legal advice or contact Maurice Blackburn. If you contact us and have received a notification of settlement please quote the Cash Converters ID number at the top of the page.
Our contact details are:
Maurice Blackburn Lawyers
Level 21, 380 La Trobe Street, Melbourne VIC 3000
Phone: 1800 550 587
Personal Loans class action
What is this case about?
The other class action is in relation to Cash Converters' 'personal loan' product obtained by Queensland borrowers between 30 July 2009 and 30 June 2013.
Maurice Blackburn's client, Sean Lynch, alleges that the 'brokerage' fee charged on personal loans in this period caused the respondents to breach consumer protection laws imposing a 48 per cent per annum interest rate cap for loans in Queensland - which meant that the annual percentage rate of interest was in excess of 175 per cent per annum. The applicant also alleges that the respondents engaged in unconscionable conduct.
Hearing before the Federal Court
On 22 October 2018, the Personal Loans Class Action went to a hearing at the Federal Court of Australia in Sydney. The hearing finished on 9 November 2018.
The trial was to determine the claims of Mr Lynch and the issues that are common to the claims of the class members.
Cash Converters denies the applicant's claims and defended the class action at trial.
We suspect that it may be some time before a judgement is handed down. This is common for matters of this scale and complexity.
If you think you may be eligible to be part of the Personal Loans Class Action, there is nothing you need to do at this stage.
In the interim, you may wish to register you details with us (if you have not done so already) so that we can keep in touch with you about any updates.
Mr Lynch represents borrowers of Personal Loans. Please click on the links below to obtain copies of the following documents in the Cash Converters Class Action for which Mr Lynch is the representative applicant:
Ms McKenzie represents borrowers of Cash Advances. Obtain copies of the following documents in the Cash Converters Class Action represented by Ms McKenzie:
What do I need to do to be a part of the class actions?
You do not need to take any positive steps to participate in the class actions. If you are found to be eligible, you will likely receive an update at a later stage, such as if the matter settles or a judgment is handed down.