Cash Converters Class Action in Queensland

Two class actions by Maurice Blackburn have commenced in the Federal Court of Australia seeking compensation for people who took out payday loans from Cash Converters in Queensland between 30 July 2009 and 30 June 2013.

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The claims allege that borrowers were charged excessive fees and interest on unsecured ‘personal loans’ and ‘cash advances’ via the imposition of a ‘brokerage’ fee. Our cases allege that the brokerage fee should have been considered to be a fee or charge under the credit contract, which in effect sets the annual percentage rate of loans as high as 420 per cent per annum, well in excess of the 48 per cent per annum legal limit.

Mr Lynch's claims

Maurice Blackburn's client Sean Lynch of Brisbane has commenced a class action on behalf of people who took out ‘personal loans’ from Cash Converters in Queensland from 30 July 2009 to 30 June 2013. Mr Lynch entered into three ‘personal loans’ with companies owned by ASX listed Cash Converters International Ltd. The companies are Cash Converters Personal Finance Pty Ltd (Cash Converters PF) and Safrock Finance Corporation (Qld) Pty Ltd (Safrock).

Each time Mr Lynch sought a $600 loan at Cash Converters stores at Goodna and Inala, he signed a form called an “Appointment of Broker”. That form requested the Cash Converters stores to recommend to an in-house Cash Converters lender, either Cash Converters PF or Safrock, that it lend him money. Those forms said Mr Lynch had to pay a “Broker’s Fee” of $210 each time he received $600. The brokerage fee was 35% of the amount he received.

On each occasion he signed the “Appointment of Broker”, Mr Lynch also signed a contract to borrow money from either Cash Converters PF or Safrock. Each contract provided for Mr Lynch to borrow money to pay the brokerage fee and provided for interest of 48% interest per annum to be charged on the $210 brokerage fee, as well as the $600 he received in the hand.

The class action alleges that the brokerage fee is a fee or charge under the credit contract and should be included to calculate the effective interest rate for his loans. Laws that operated in Queensland from 31 July 2008 to 30 June 2013 set a maximum interest rate of 48% per annum. If the brokerage fee is considered to be a fee or charge under the credit contract, the effective annual percentage rate of the loan for each of Mr Lynch’s loans is over 160% per annum. Mr Lynch seeks compensation for himself and group members for the amounts of fees and charges paid on the loan above the 48% per annum interest rate cap, plus interest that has accrued.

The class action also alleges the brokerage fee was part of a mechanism designed to ensure the lenders received a return greater than the statutory interest rate cap of 48% per annum and that the brokerage service provided by the Inala and Goodna Cash Converters stores was illusory. As result of these allegations, Mr Lynch also pleads that the conduct of the lenders was unconscionable under section 12CB of the Australian Securities and Investments Commission Act 2001 (Cth).

Ms McKenzie’s claims

Similarly to Mr Lynch, Maurice Blackburn's client Kim McKenzie seeks to obtain refunds of brokerage fees paid on cash advances, on behalf of herself and an estimated 23,000 Queensland borrowers in the period from 27 April 2010 until 30 June 2013 – estimated to amount to up to $17m.

Ms McKenzie, an Aboriginal woman and disability pensioner from the Gold Coast, has commenced a class action on behalf of people who took out in Queensland from 27 April 2010 to 30 June 2013. Ms McKenzie entered into fifteen cash advances with companies owned by ASX listed Cash Converters International Ltd. The companies are Cash Converters (Cash Advance) Pty Ltd (‘CC Cash Advance’), Cash Converters Stores Pty Ltd (‘CC Stores’) and Bak Property Pty Ltd (‘Bak’).

Each time Ms McKenzie sought a loan between $100 and $151, at a Cash Converters store in Robina, she signed a form called an ‘Appointment of Broker’. That form requested that the Cash Converters store recommend to an in-house Cash Converters lender, either CC Cash Advance, CC Stores or Bak, that it lend her money. Those forms said Ms McKenzie had to pay a ‘Broker’s Fee’ of between $35 and $52.50 each time she a took out a cash advance. The brokerage fee was 35% of the amount she received.

On each occasion she signed the ‘Appointment of Broker’, Ms McKenzie also signed a contract to borrow money from either CC Cash Advance, CC Stores or Bak. Each contract provided for Ms McKenzie to borrow money to pay the brokerage fee and provided for interest of 48% interest per annum to be charged on the brokerage fee, as well as the loan money she received in the hand.

The class action alleges that the brokerage fee is a fee or charge under the credit contract and should be included to calculate the effective interest rate for Ms McKenzie’s loans. Laws that operated in Queensland from 31 July 2008 to 30 June 2013 set a maximum interest rate of 48% per annum. If the brokerage fee is considered to be a fee or charge under the credit contract, the effective annual percentage rate of the loan for each of Ms McKenzie’s loans is around 420% per annum. Ms McKenzie seeks compensation for herself and group members for the amount of fees and charges paid on the loan above the 48% per annum interest rate cap, plus interest that has accrued.

The class action also alleges the brokerage fee was part of a mechanism designed to ensure the lenders received a return greater than the statutory interest rate cap of 48% per annum and that the brokerage service provided by the Robina Cash Converters store was illusory. As a result of these allegations, Ms McKenzie also pleads that the conduct of the lenders was unconscionable under section 12CB of the Australian Securities and Investments Commission Act 2001 (Cth).

Who can benefit from the class actions?

Maurice Blackburn estimates that tens of thousands of people may be eligible to participate in Mr Lynch and/or Ms McKenzie’s class actions involving Cash Converters loans in Queensland.

Mr Lynch’s action covers all ‘personal loans’ from 30 July 2009 to 30 June 2013 from all Queensland Cash Converters stores. It includes loans applied for online if you were a Queensland resident at the time of application. Cash Converters’ ‘personal loans’ were typically between $600 and $2000 and paid off in about 6 months.

In regards to Ms McKenzie’s action, people who obtained cash advances, from 27 April 2010 until 30 June 2013, at any of the following stores owned by Cash Converters International Ltd, are likely to be group members in the class action:

  1. Aspley;
  2. Cannon Hill;
  3. Gaythorne;
  4. Mr Gravatt;
  5. Runaway Bay;
  6. Stafford; or
  7. Wynnum.

Persons who obtained cash advances, from around August 2010 until 30 June 2013, at any of the following stores may be members of the class action if their loans were with one or more of the following companies: Cash Converters (Cash Advances) Pty Ltd, Cash Converters Stores Pty Ltd or Bak Property Pty Ltd

  1. Bundaberg;
  2. Coolangatta;
  3. Goodna;
  4. Indooroopilly;
  5. Moorooka;
  6. Palm Beach;
  7. Robina; or
  8. Rockhampton.

These stores changed hands in the relevant period and therefore not all cash advances given at these stores are included in the class action. Cash advances were typically between $100 and $150 and paid off in about one month.

Cash Advances, which were provided by Franchisee Stores, as opposed to the stores owned by Cash Converters and named above, are not included in Mr Lynch or Mrs McKenzie’s actions. Further, the class actions do not include Cash Converters loans that were ‘secured’ over property or linked to a pawn broking service.

If you took out any loans from Cash Converters in Queensland between 30 June 2009 and 30 June 2013 we invite you to register your interest with us. We will be able to provide you further information and updates.

Register for the Cash Converters Class Action in Queensland

What sort of compensation may be paid, and when?

If the class actions are successful at trial, or a settlement is reached with the respondents, eligible group members will be paid compensation based on the amount of fees and interest charged on each of their loan., in the relevant class action. The claims do not include the amount of money you borrowed and received in the hand. In other words you will not be entitled to the return of the principal amount of the loan.

Because of the number of people involved and the legal complexities the cases, like many class actions, they may take a few years before they are resolved.

How much does it cost to be a part of the class actions?

Maurice Blackburn is conducting the class actions on a ‘no win no fee’ basis. That means that you do not have to pay any money up front to participate and if Mr Lynch and/or Ms McKenzie’s claims do not succeed, you will not be required to pay any money related to that respective action.

If either of the the class actions are successful at trial or Mr Lynch and/or Ms McKenzie are able to reach a settlement with Cash Converters and a refund becomes payable to the group members, the Court will supervise any orders for the payment of Mr Lynch and/or Ms McKenzie’s legal costs. The Court may make an order that some of that compensation be used to help pay a share of the legal costs incurred by Mr Lynch and/or Ms McKenzie for the benefit of the class. The legal fees will be divided amongst everyone who makes a claim, and the contribution asked of every group member will not exceed the amount of your compensation.

What do I need to do to be a part of the class actions?

At this point you don't need to take any positive steps to participate in the class actions but we encourage you to register your interest with Maurice Blackburn so we can keep in touch with you.

Please fill in your details, or you can call 1800 550 587 and we can register your interest over the phone.

It is important that you keep any documents that you have regarding your Cash Converters loans in a safe place.