Cash Converters settles class action for $42.5 million
25 March 2020, Written by David Simmons
Nearly 70,000 Queensland Cash Converters customers will share in the spoils of a $42.5 million class action settlement.
The Federal Court approved the settlement on Tuesday following a successful class action brought by Maurice Blackburn Lawyers that will benefit those affected by Cash Converters' alleged breach of credit laws.
According to Maurice Blackburn, class action members could start receiving compensation by late May or early June.
The Australian law firm alleged the payday lender breached Queensland credit laws by effectively charging borrowers interest rates of more than 175 per cent per annum.
Consumer laws in Queensland that commenced in 2008 capped the maximum interest chargeable at 48 per cent per annum, inclusive of credit fees and charges under the credit contract.
The firm alleged Cash Converters imposed a "brokerage fee" to avoid the impact of the new interest cap, thus ensuring Cash Converters obtained a greater return than the laws allowed.
Maurice Blackburn principal lawyer Miranda Nagy says the settlement is a big win for Cash Converters' customers, many of whom are some of the most vulnerable members of the Queensland community.
"In the present difficult and uncertain economic environment, where so many people are facing hardship, we are really pleased to be able to successfully resolve the class action and ensure that such a large group of people will receive compensation," says Nagy.
"We are grateful to the court and other parties that this matter was settled in these very trying times under very difficult circumstances.
"More than 60 per cent of the people involved in this case have annual incomes of somewhere between $12,000 and $35,999, so these type of loans are often a last resort."
Business News Australia
Author: David Simmons