mayo 2, 2017

Cash Converters to refund almost $11 million to payday loan customers

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Cash Converters to refund almost $11 million to payday loan customers

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The payday lender is forced to refund $10.8 million to customers. Photo: Brendon Thorne

Cash Converters will refund almost $11 million to payday loan customers after the corporate watchdog caught it failing to check if borrowers could actually afford to pay back the loans.

The Australian Securities and Investments Commission has also hit Cash Converters with a $1.35 million fine for issuing unsuitable small loans to about 118,000 customers through its website.

The pawn shop and payday lender incurred 30 infringement notices under the National Credit Act by failing to make reasonable inquiries about, or take reasonable steps to verify, customers’ income and expenses, ASIC said in statement released on Wednesday morning.

Instead of looking at a customer’s bank statements to establish their expenses, Cash Converters guessed those figures, using an assumed benchmark “that had no relationship to the real expenses of the individual consumer”, ASIC said.

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  • The watchdog said customers who took out two or more payday loans in the 90 days before taking out another loan online with Cash Converters between July 1, 2013 and June 1, 2016 will be contacted about receiving their share of $10.8 million in refunds.

    “ASIC is seeking to protect financially vulnerable consumers, many of whom are recipients of welfare payments, from falling victim to unsuitable payday loans,” ASIC deputy chairman Peter Kell said.

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    ASIC said Cash Converters failed to properly check if the loans were appropriate. Photo: Karl Hilzinger

    “Payday lending is a high priority area for ASIC, and we will continue to pursue lenders who do not follow their responsible lending obligations.”

    The refunds will be overseen by an independent expert who will report to ASIC. The expert will also review Cash Converters’ business and its compliance with consumer credit laws and report back to ASIC, as part of an enforceable undertaking the lender and ASIC have agreed to.

    ASIC said anyone who thinks they may have taking out an unsuitable loan with Cash Converters, either online or in a store, should lodge a complaint with the Credit and Investments Ombudsman.

    More than 1 million Australians are estimated to take out a payday – or short-term credit contract – loan each year. In 2012, the market was between $800 million and $1 billion.

    Patrick Hatch

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