Pay Day Loans

Reporter: Helen Wellings

Ben Slade, NSW Managing Principal of Maurice Blackburn Lawyers, says: "They tried to trick us and they won't get away with it. We've got them and we will get them well and truly".

So much for the promises of pots of gold! The controversial payday lender, Cash Converters, is being bitten by the very hands it was claiming to feed -- being sued by its own NSW customers.

More than 50,000 people are members of two class actions against Cash Converters. They're claiming $40 million in compensation for absurdly high interest rates, unbelievably up to 633%.

Julie Gray, a Cambridge Park Disability Pensioner, lead plaintiff in the class actions says, "It's continuing. You just get caught in an endless debt circle and it's really hard to get out of it".

Julie, a diabetic, is the lead plaintiff in the class actions, representing other borrowers. She claims Cash Converters took advantage of her desperate need to pay ordinary household bills. She took out 20 small loans over three years, borrowing a total of $3,010. "I've used it for food sometimes when I haven't had food, petrol, I mightn't have had petrol to get to the specialist appointment", Julie said.

Julie said she thought she would be charged 48%. "It said that on the documentation", she said.

48% is the legal cap in NSW, but Julie was allegedly paying far more. "It is outrageous to charge 633 per cent interest to all these people who are totally powerless to do anything about it", said Ben.

Managing Director of Cash Converters International, Peter Cumins wasn't available for comment but the company states that its fees have been properly levied and are lawful.

"We can fight with one voice and get Cash Converters to stand up and be accountable for this extraordinary rip off", Ben said.

Maurice Blackburn Lawyers filed the class actions against Cash Converters in the Federal Court today; one over personal loans and the other action involving cash advances made from 2010 until June this year. "They hit you with this outrageous charge through a thing called a deferred establishment fee. The contracts on cash advances is enormous 633 per cent and on personal loans 145 per cent. It's way over the 48% cap", Ben said.

Fiona Guthrie, Executive Director Financial Counselling Australia, says, "Pay day loans are a debt trap. It's as simple as that".

Fiona says before borrowing get free community based financial help. Julie's done that and is now on track at last. "Go to a financial counsellor because you will have options", Julie said.

 

Click here for the Statement from Cash Converters

Statement from Ian Day, General Manager (Australia):

"Cash Converters has received a letter from Maurice Blackburn advising of a class action on behalf of one borrower and unnamed group claimants. Cash Converters will defend these allegations vigorously. The Company has released an announcement to the ASX addressing this matter."

Contact:

Community financial counselling free service - www.debtselfhelp.org.au or call 1800 007 007