A compensation law firm is investigating a class action lawsuit against a short-term loan facilitator after it was revealed that payday lenders had driven vulnerable Australians to drown in debt.
Slater and Gordon investigate Cigno Loans and related entities after discovering that the payday lender has set up its business structure to escape the usual operation of National Law on Consumer Protection, which would have imposed firm limits on fees and interest collected.
Cigno’s “predatory lending practices” targeted vulnerable Australians who were then hit with a series of fees and interest, sometimes resulting in interest bills of over 990%.
Payday loans started small, but many of them included fees, charges, and interest rates, causing the repayable fees to become “exorbitant.” The Australian Securities and Investments Commission has banned these practices and Cigno Loans recently lost the overturn of that ban in Federal Court.
William Zerno, partner at Slater and Gordon, said: “In one reported case, a client of Cigno Loans obtained a short term loan of $ 120. In the end, she was required to repay almost $ 1,200. These type of payday loans seem to target some of the most vulnerable sectors of our society, which will often have the least capacity to absorb massive interest charges and the least ability to challenge these kinds of onerous loan terms.
While the investigation is still ongoing, Slater and Gordons said there appears to be a “strong argument” that the practices were unreasonable and violated consumer protection laws.
“Consumers have the right to seek redress if they suffer financial loss as a result of this unacceptable behavior on the part of the companies with which they engage,” Zerno said.
“Slater and Gordon will be working hard over the next few weeks to contact people who have been the victims of these aggressive payday lending practices. “