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Cash Converters International Limited (ASX:CCV) faces a $40 million class action amid claims that it forced customers to pay loan charges that exceed a legal cap on interest rates.
Law firm Maurice Blackburn is set to initiate a class action in the Federal Court alleging thousands of customers were caught out by the high charges.
The firm alleges Cash Converters borrowers paid interest rates to the equivalent of 633 per cent on some loans, despite laws in NSW capping rates at 48 per cent. The cap also applies in Victoria and Queensland.
The company did not comment on the claim, but said its loan products complied with all state laws.
Maurice Blackburn NSW managing principal Ben Slade says the firm will initiate two class actions, seeking about $40 million compensation on behalf of 50,000 NSW customers.
Cash Converters posted a 12 per cent lift in net profit to $32.9 million for fiscal 2013.
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