Cash Converters is paying $16.4 million to settle a class action

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  • Cash Converters allegedly charged more than 600% in interest a year on a cash advance.
  • The company today settled one class action with payment of $16.4 million.
  • A second class action is going to court.

Payday lender Cash Converters has settled one of two class actions relating to lending in Queensland which allegedly breached a 48% annual interest rate cap for loans in that state.

The McKenzie Settlement provides for Cash Converters to pay $10.6 million plus legal, administration and other costs capped at $5.8 million.

A short time ago, Cash Converter shares were 9.4% higher at $0.29.

Law firm Maurice Blackburn had alleged borrowers were charged excessive fees and interest on unsecured Personal Loans and Cash Advances via a brokerage fee.

The fee meant the annual percentage rate of interest applicable for a Cash Advance was more than 600% a year, and for a Personal Loan about 175%.

Cash Converters says it will vigorously defend a second class action.

“Cash Converters is pleased to bring this litigation to a close without any admission of liability,” the company says.

“The settlement prevents further legal costs in the litigation, avoids the application of further executive and employee resources to the case and brings an end to the uncertainty surrounding this matter.”

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