Update: No further payment of refunds under the cash converters nsw class actions will be made
10 October 2016
On 3 October 2016 and 10 October 2016, Maurice Blackburn made final refund payments to group members from the Cash Converters NSW class actions. These payments were made to all group members who received refunds in previous payments, as well as those group members who were not successfully paid in either the December 2015, February 2016 or June 2016 payments, and who have been in contact with Maurice Blackburn since then to update their bank details. For group members who had already received a refund, the payments made on 3 October 2016 and 10 October 2016 were prorated amounts of the remaining settlement funds, and will be substantially less than the initial refund. For group members who had not been successfully refunded prior to October 2016, this payment is comprised of both the initial refund amount, plus additional prorated amounts.
The payments on 3 and 10 October 2016 are the very last payments that will be made by Maurice Blackburn under the Cash Converters NSW class actions. The entirety of the settlement funds have now been paid out to all group members for whom Maurice Blackburn held correct bank details. There will be no further opportunities to claim any entitlement to a refund under the class actions.
Settlement of the Cash Converters NSW class actions
Julie Gray v Cash Converters International Limited (NSD 2089 and 2090 of 2013)
The Federal Court of Australia approved the settlement between Julie Gray and Cash Converters, at a hearing held on 12 October 2015. Maurice Blackburn has been appointed by the Court to administer the settlement, by responding to group member enquiries and refunding the settlement monies to all eligible group members.
The Federal Court of Australia has ordered the publication of this Notice of Settlement to Group Members in the Cash Converters Class Actions. Group Members were sent the Notice of Settlement by email or post during September 2015 to the last known addresses held by Cash Converters.
The Notice of Settlement explains important information about the settlement and the refund of the ‘Deferred Establishment Fee’ that has beenprovided to Group Members.
Further information about the settlement of the Cash Converters class actions
- Who are the Group Members in the class actions?
In the ‘Personal Loans’ class action, the Group Members are people who entered into one or more credit contracts in NSW with Cash Converters between 1 July 2010 and 30 June 2013 and had fees and/or charges called an ‘Administration Fee’, an ‘nAdmin’ fee, or a ‘Deferred Establishment Fee’ debited to their account.
In the ‘Cash Advances’ class action, the Group Members are people who entered into one or more credit contracts in NSW between 1 July 2010 and 30 June 2013 and had signed a document entitled ‘Cash Advance Early Repayment Election’, and where the lender was a Cash Converters franchisee or franchisee lender, or was Cash Converters (Cash Advance) Pty Ltd.
Pawnbroking loans or other services from Cash Converters are not included.
- Legal consequences of the settlement
Group Members’ legal rights are affected by the settlement. 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 from all claims and liabilities which were the subject of the class action.
- Who will be eligible to receive compensation?
Approximately 38,000 people were eligible to receive compensation. Group Members must have paid a fee called a ‘Deferred Establishment Fee’ (sometimes also referred to as an ‘nAdmin’ or ‘Administration’ fee) to be eligible for compensation. Group Members may not be aware that they paid a ‘Deferred Establishment Fee’. Persons who paid back a ‘cash advance’ or ‘personal loan’ over a period of 24 months are unlikely to be eligible.
For a Group Member to obtain compensation, Maurice Blackburn must have been in possession of the Group Member’s correct bank details by the time of the last payment took place on 10 October 2016, before the end of the administration period.
Group Members were also invited to tell Maurice Blackburn if they d not want to receive a refund.
- Summary of the terms of the settlement
The settlement is for both the ‘Personal Loans’ and the ‘Cash Advances’ class actions. The Federal Court approved the settlement on 12 October 2015. The key terms are:
The claims in the class actions
- Cash Converters will pay $20 million to be distributed to Group Members;
- Cash Converters will pay $3 million to Maurice Blackburn for legal fees;
- Group Members can receive a Maximum Refund of the ‘Deferred Establishment Fee’ plus 20% (that fee that was typically around 35% of the principal of the loan; for example, if the loan was for $1,000, the ‘Deferred Establishment Fee’ was likely to have been $350 and the Maximum Refund would be $420);
- Cash Converters will provide details about Group Members, including loan details and bank details to Maurice Blackburn to administer the settlement;
- Group Members can contact Maurice Blackburn to update their bank details or to decline a refund;
- Maurice Blackburn will attempt to pay all Group Members with the bank account details provided by Cash Converters or provided by Group Members, but if the bank account details are incorrect or Group Members cannot be located to provide correct details they may miss out on receiving any compensation;
- Payments to Group Members may be in more than one instalment and may be less than the Maximum Refund, and if so will be distributed on a pro rata basis according to the amount of the ‘Deferred Establishment Fee’ paid by that Group Member compared to the total of the ‘Deferred Establishment Fee’ paid by all Group Members;
- Maurice Blackburn has 12 months to administer the settlement (until 13 October 2016) and pay Group Members;
- If any money remains at the end of the 12 month administration period after Maurice Blackburn’s approved administration costs are deducted, it will be returned to Cash Converters;
- After all payments are made and the administration period has expired, Ms Gray and Group Members will be deemed to have released all of the defendants and Cash Converters (Cash Advance) Pty Ltd from all claims and liabilities arising out of matters the subject of the class actions.
In October 2013 Julie Gray, a pensioner and grandmother from western Sydney, commenced two class actions against Cash Converters International Limited and related companies on behalf of people who obtained loans through Cash Converters in NSW in the form of either 'Cash Advances' or 'Personal Loans'. The 'Cash Advances' case was also brought against Ja-Ke Holdings Pty Ltd, a franchisee operating the Penrith Cash Converters store. Ms Gray alleged that Cash Converters in NSW had a business system whereby borrowers would sign an ‘Early Repayment Election’, electing to repay their loans earlier than 24 months. They were then charged a ‘Deferred Establishment Fee’ because of the early repayment.
The legal basis of Ms Gray’s claims on behalf of the Group Members was that either the ‘Deferred Establishment Fee’ caused the total interest, fees and charges on the loans to be greater than the permissible 48% per annum under the Credit (Commonwealth Powers) Act 2010 (NSW), or the ‘Deferred Establishment Fee’ could not legally be charged under the contract. That conduct was alleged to have been unconscionable under section 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth).
The allegations of unconscionable conduct were made against the credit providers which were Safrock Finance Corporation (Qld) Pty Ltd and Cash Converters Personal Finance Pty Ltd in the ‘Personal Loans’ class action and Ja-Ke Holdings Pty Ltd in the ‘Cash Advances’ class action.
The remaining defendants, Cash Converters International Ltd and Cash Converters Pty Ltd, were alleged to have been liable as accessories for their involvement in the unconscionable conduct because, it was alleged, they required Cash Converters franchisees in NSW and other Cash Converters companies to offer and administer loans in a manner that involved debiting those fees to borrowers' accounts, or knew that they did so.
As a result, Ms Gray sought compensation for the payment of the ‘Deferred Establishment Fee’, and interest, on behalf of Group Members in the class actions.
In agreeing to settle the claims, Cash Converters and Ja-Ke Holdings Pty Limited did not admit liability.
How can the statements of claim and other legal documents be obtained?
The statements of claim and other legal documents can be obtained here:
Court approval hearing – 12 October 2015
On 2 October 2015 at 10:15am, at the Federal Court of Australia, held a hearing to decide if the settlement is fair and reasonable and in the interests of the Group Members. The Court approved the settlement. It was not necessary for Group Members to attend that hearing to support the approval of the settlement or in order to receive a refund.
Group Members were invited to attend the hearing (or send a representative) in order to seek leave to be heard by the Court and to explain to the Court why the settlement should not have been approved, and whether he or she wished to participate in the settlement or to opt out of the proceeding if the settlement was approved. No Group Member opposed the settlement or chose to opt out.
Steps required to participate in the settlement
Provided that Group Members’ bank account details known to Cash Converters as at 1 July 2015 were correct, they did not need to take any active steps to participate in the settlement as payment was made into that bank account.
Opting out of the settlement
The opt out period for the class actions ended on 25 March 2015 and there is no provision to opt out of the action under the settlement. The only way for Group Members to attempt to opt out of the settlement and preserve their legal rights was to make an application to the Court at the hearing on 12 October 2015. All Group Members are now bound by the settlement, including any Group Members who decline to receive their refund.
The information Maurice Blackburn received from Cash Converters or Group Members wasonly used for the purpose of paying the refund or locating a Group Member to obtain updated account details. Maurice Blackburn also made appropriate identity checks to ensure that we paid the right people.
Participation in the class actions, including by receiving a refund, should not cause you to be treated adversely by any Cash Converters company or franchisee, including if you apply for future loans with Cash Converters.