Cash Converters has agreed to a $16.4m settlement of one part of a claim after allegations the lending giant had ripped off Queensland borrowers were brought to court.
The class action trial began in Sydney on Monday with counsel for the victims, John Sheahan QC, informing the Federal Court of a successful outcome for cash advance customers alleged to have paid more than 600 per cent interest on their loans.
The claim, being run by Maurice Blackburn’s Miranda Nagy, was brought on behalf of nearly 30,000 customers who had taken one-month loans that included brokerage fees that inflated the amount of interest charged.
“This class action is a perfect example of how the class action regime works to promote access to justice for the most disadvantaged in our community,” said Ms Nagy, who settled two class actions against the same company in 2015 for $23m.
“This is a large group of people, who borrowed very small amounts of money, for very short periods, at high interest rates.”
The brokerage fee is central to the remaining claim that Cash Converters’ brokerage fees on personal loans breached Queensland credit laws by effectively charging borrowers interest rates of more than 175 per cent per annum – well above the lawful 48 per cent maximum.
“We are really pleased with this result, but are focused on winning the rest of our case and obtaining justice for an even bigger group of people who took out CashConverters’ personal loans,” Ms Nagy said.
The trial is expected to run for three weeks.