An out-of-court settlement for $23m has been agreed in Australia, in compensation to approximately 37,500 customers who claimed they had been charged excessive interest.
Although the lawyers of the customers say the settlement is still dependent on approval from the federal court, it represents a “significant victory” for the customers. Ben Slade, of Maurice Blackburn Lawyers, said: “Our understanding is and our expectation is that all of the group members will receive all of their overcharge plus interest. It’s a particularly impressive settlement.”
The lawyers argued that Cash Converters had found a way around the capped interest rates, making borrowers sign a document which obligated them to pay their loans back early, and also led to interest rates to rise more than twice as high for seven-month loans. and rise seven-fold for one-month cash advance loans.
Cash Converters stated that it would pay $3m for the court costs, and $20m would be put into a fund which would then be distributed between the members of the class action. All customers from July 2010 to July 2013 (when new lending rules were introduced) are covered by the class action.
Commenting on the outcome, the company said: “Cash converters is pleased to bring this litigation to a close without any admission of liability.”
