- Cash Converters has agreed to pay more than $42 million after the company was accused of charging excessive fees to vulnerable customers
- More than 60,000 Queenslanders will receive a share of the cash after a Deed of Settlement was reached today
- It is believed that Cash Converters charged a 175 per cent premium on its annual interest rates from July 2009 to June 2013
- Cash Converter shares are up 26.7 per cent today, trading for 19 cents apiece
Cash Converters has agreed to pay $42.5 million after the company was accused of charging excessive fees to vulnerable customers.
More than 60,000 Queenslanders will be handed a share of the cash after a Deed of Settlement was reached today.
The payment will be paid in two phases with the first phase consisting of $32.5 million to be paid within 21 days of execution of the Deed of Settlement.
The second phase will consist of the remaining $10 million and will be paid on or before September 30, 2020.
It is believed that Cash Converters engaged in reclusive conduct by charging more than 175 per cent of its usual annual interest rates from July 2009 to June 2013.
The affected customers were sent into “debt spirals” because of this and engaged law firm Maurice Blackburn.
This comes after Cash Converters posted a $1.69 million loss for the 2019 financial year, compared to a profit of $22.5 million the previous year.
Its EBITDA also suffered, ending the year at $39.75 million compared to the $43.51 million in 2018.
The company blamed this on the McKenzie class action which was also launched by Maurice Blackburn in 2016 for its poor yearly results.
In order for this settlement to be finalised, it must first be approved by the Federal Court.
Shares in Cash Converters are up 26.7 per cent today, trading for 29 cents apiece at 1:01 pm AEDT.
However, this is significantly down from the high of $1.39 per share on April 2013.