Cash Converters has agreed to pay $42.5 million to settle a class action against the company on behalf of Queenslanders who took out consumer credit loans with the payday lender.
The company on Monday said it would pay members of the class action $32.5 million within 21 days of execution of the deed of settlement and an extra $10 million by September 30, 2020 as part of the deal without any admission of liability.
The Lynch Settlement, agreed and announced to the ASX on Monday, is named after lead plaintiff Sean Lynch and affects about 68,000 people in Queensland who borrowed money from Cash Converters between July 30, 2009 and June 30, 2013.
Maurice Blackburn Lawyers had alleged the company breached the state's credit laws by effectively charging borrowers interest rates of more than 175 per cent per year.
"More than 60 per cent of the people involved in this case have annual incomes of somewhere between $12,000 and $35,999, so these type of loans are often a last resort and the type of compensation we have secured for them today is extremely meaningful," Maurice Blackburn lawyer Miranda Nagy said.
Cash Converters shares surged 30 per cent to 19.5 cents at 1105 AEDT following the announcement but remained at about half their value compared to two years ago.
© AAP 2019