Cash Converters has hit another bout of difficulty with a $17 million class action lawsuit being filed against them in Brisbane this week. This follows the previous lawsuit they faced last year in New South Wales, where they were ordered to play $23 million to over 35,700 customers.
The company is accused of charging interest rates up to 420% by going around Queensland lending laws and avoiding the interest rate cap of 48% by introducing brokerage fees. Special counsel Miranda Nagy from Maurice Blackburn Lawyers will be heading the lawsuit, and claims that their borrowing practices were systematic to lure vulnerable customers into a debt spiral, where they had to continually borrow to be able to repay their loan fees. The fees on the loans, as calculated by Nagy, could be up to 1/3 of the principal amount.
By adding brokerage fees at this exorbitant rate, Cash Converters avoided the rate cap and made it possible to continue acting in this manner without the knowledge of the borrowers.
Although Cash Converters has come out and specifically denied these accusations, it’s hard to look past their track record with previous lawsuits and the evidence mounting against them that they were engaging in unethical and fundamentally illegal activities.
We’re interested to see how this case pans out in comparison with their 2015 NSW lawsuit.