Money converters: turning your misery into money… until the arrival of Maurice Blackburn
Australia’s largest ‘payday loan’ firm caved in on day one of a class action lawsuit, spitting out a $ 16.4 million settlement to settle part of a case brought by nearly 30,000 Queenslanders, including some were illegally charged at interest rates exceeding 600 percent per annum.
The maximum annual interest payable under Queensland law is 48 percent per annum.
This is the third time in as many years that Maurice Blackburn Lawyers has brought a class action lawsuit against Cash Converters. The ASX-listed company – worth nearly $ 200 million with more than 700 franchises worldwide – has been successfully sued for $ 23 million in two separate lawsuits on behalf of 37,000 NSW customers in 2015.
Maurice Blackburn alleges that once again Cash Converters acted “unreasonably and illegally” by imposing astronomical interest rates on short-term loans to borrowers in Queensland.
Customers of Queensland Cash Converters who took month-long loans – sometimes referred to as “payday loans” or “cash advances” – were also charged “brokerage fees,” a move that effectively pushed the rate up. interest at more than 600% per year.
This morning in Federal Court before Judge Jacqueline Gleeson, John Sheahan QC representing Cash Converters told the court there was no need to continue the lawsuit after his clients successfully negotiated the $ 16.4 million settlement. of dollars.
Payment is “without admission of liability” by Cash Converters.
But Cash Converters is far from out of the woods. “Brokerage fees” are also at the heart of the remaining part of Maurice Blackburn’s lawsuit, who alleges that Cash Converters brokerage fees on personal loans (longer term and higher value loans) also violated the Queensland’s credit laws by effectively charging borrowers interest rates of over 175 percent per annum.
Personal loans traded by Cash Converters were significantly larger than cash advance loans, with amounts between $ 600 and $ 2,000 borrowed for a six-month loan term.
Legislation introduced in Queensland in 2008 capped the maximum interest payable to a borrower at 48 percent per annum, including credit charges and fees. The argument to be made on behalf of Queensland borrowers is that Cash Converters’ “brokerage” fees, which were introduced to coincide with the new laws, were only a mechanism to defeat the new laws.
Maurice Blackburn’s lead attorney Miranda Nagy, who also led the two previous class actions against Cash Converters for similar violations in New South Wales, said the case was the perfect illustration of how the “Class Action Framework” has been able to provide the most disadvantaged people with community access to justice.
“Class actions like this give a voice to the voiceless, they help enforce loan laws that aim to protect consumers, and they help ordinary people hold big business to account,” Ms. Nagy.
“This is a large group of people, who have borrowed very small amounts of money, for very short periods of time, at high interest rates.
“None of them could hope to have conducted this case for justice without an effective class action regime.
“We are really happy with this result, but we are focused on winning the rest of our case and securing justice for an even larger group of people who took out the personal loans from Cash Converters.”
The trial before Judge Gleeson is continuing and is expected to last three weeks.
In the meantime, here is a chart showing the performance of Cash Converter on the Australian Stock Exchange.
This massive drop in market value that you can see in February 2015 coincides with the 2015 final class action lawsuit and a government payday loan investigation.
The Perth-based company has never recovered from the crash, despite reported 2017 profits of more than $ 20 million.
Last week, the Federal Senate also announced a new investigation into “payday loan” companies, causing Cash Converters’ share price to fall further by 12%.
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