Benefit Recipient Paid 884% Interest: Investigation Calls Payday Loan Reshuffle | Payday loans


Payday lenders and rental companies are set to face tougher regulations and need to improve the way they view the needs of struggling families, according to a survey.

A Senate Economics Committee investigation, which reported on Friday, learned that in one case an unemployed person paid the equivalent of an 884% interest rate on a rented clothes dryer.

The survey found that payday loans were offered at rates between 112% and 407%.

“Often times, these products not only appear to have been targeted at financially struggling Australians – they appear to have been designed to take advantage of them,” the report revealed.

He recommended new laws to protect consumers, additional funding for regulators to monitor the small and medium credit contract industry, and a mandatory obligation to act in the best interests of customers.

He also said that tax and other incentives should be considered to increase the number of small credit providers offering products at low interest rates.

The Consumer Action Law Center said implementing the report’s recommendations should be a priority for the government.

Its chief executive, Gerard Brody, said: “These companies, which have escaped scrutiny by the Royal Banking Commission, add to the unmanageable debt problems of many Australians.”

Labor Senator Jenny McAllister said in a statement that the report “highlights years of exploitation of vulnerable consumers by financial providers”.

Monday, Labor presented a private member’s bill address consumer credit protections.

The bill included placing a cap on the total number of payments that could be made on lease-to-own programs and requiring payday loans to have equal repayments and payment intervals.


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