Cash Converters to defend against $40 million class-action lawsuits
Friday, October 11, 2013/
Cash Converters will fight back against a lawsuit threat from Maurice Blackburn, saying in a statement it intends to defend against the $40 million claim.
Maurice Blackburn said yesterday it had initiated two class-action lawsuits against the company for allegedly targeting customers with loans they could never possibly repay, and by charging exorbitant interest rates.
Cash Converters general manager Ian Day said in a statement yesterday it had received news of the class action, on behalf of an “unnamed group claimants”.
“Converters will defend these allegations vigorously,” he said.
The specific claim that Cash Converters charged an unlawful deferred establishment fee on loans isn’t true, the company said in a statement on the ASX, given the fees were completely lawful at the time.
“The company is confident that the fees have been properly levied and are completely lawful,” it said.
“In fact, included in the new legislation was a provision specifically addressing deferred establishment fees, which provision would not have been necessary if they were already unlawful under the preceding legislation,” it said.
Maurice Blackburn claims customers were charged interest rates as high as 633% – significantly above the 48% rate mandated by NSW consumer credit law.
However, Cash Converters said the total fees referred to by Maurice Blackburn seem “vastly inflated”, given the lending in the state was “only for a period of some three years”.
“Detailed analysis of the matter is not yet possible since the company has no idea whether there is more than one claimant, but in any event, in the opinion of the company, the action is based on a flawed proposition and will be defended.”
The lawsuit comes as the Australian Securities and Investments Commission has been cracking down on payday lenders.