Payday lender faces class action investigation
A MAJOR law firm is investigating a class action against Cigno Loans saying there is a strong case the Gold Coast payday lender broke consumer law.
Yesterday Cigno lost its appeal in the Federal Court to overturn a Product Intervention Order (PIO) lodged by the Australian Securities and Investments Commission in September last year. Cigno's appeal claimed the PIO was invalid.
The order banned a model of financial products that led to "predatory" lending in the short-term credit industry. ASIC claimed "significant consumer detriment" via charges 10 times the amount borrowed.
This afternoon Slater and Gordon associate William Zerno said it is reaching out to people who were victims of the "repugnant" lending practice.
"In one reported case, a Cigno Loans customer obtained short-term credit for $120. By the end, she was liable to repay almost $1200," Mr Zerno said.
"These kinds of payday loans seem to be targeted towards some of most vulnerable sectors of our society, who often will have the least ability to absorb massive interest charges, and the least ability to challenge these kinds of onerous lending terms.
"While our investigation is still ongoing, so far there looks to be a strong argument that these practices were unconscionable and would have broken Australia's consumer protection and credit laws had it not been for Cigno's corporate structure. Consumers have a right to seek redress if they suffer financial losses because of unconscionable conduct by corporations they engage with.
"Slater and Gordon will be working hard in the coming weeks to reach out to people who were victims of these aggressive pay day loan practices."
Cigno did not respond to requests for comment.
Originally published as Coast payday lender faces class action investigation