Cash Converters has agreed to pay $42.5 million to settle a class action lawsuit against the company on behalf of Queenslanders who took out consumer loans from the payday lender.
The WA-founded company said on Monday it will pay class action members $32.5 million within 21 days of the settlement deed being executed and an additional $10 million by September 30, 2020. under the agreement without any acknowledgment of liability.
The Lynch settlement, agreed and announced at the ASX on Monday, is named for lead plaintiff Sean Lynch and affects around 68,000 people in Queensland who borrowed money from Cash Converters between July 30, 2009 and June 30, 2013 .
Lawyers for Maurice Blackburn had alleged that the company violated state credit laws by charging borrowers interest rates of more than 175% per annum.
“Over 60% of the people involved in this case have annual incomes between $12,000 and $35,999. So this type of loan is often a last resort and the type of compensation we got them today is extremely significant,” Maurice told Blackburn lawyer Miranda Nagy.
Shares of Cash Converters had jumped 26.7% to 19¢ as of 11:40 a.m., but were still about half their value from two years ago.