Former staff say Cash Train loaned to problem gamblers, but payday lender denies claim
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Version 0 of 1. Former employees of online payday lender Cash Train say they regularly approved loans to problem gamblers and to borrowers caught in debt spirals, claims the company has flatly rejected. In rejecting the allegations, the company said it went above any beyond what was legally required to ensure it lends responsibly, and had no interest in giving money to those who cannot repay. The short-term lending industry has been under close scrutiny since a different payday lending company, Cash Converters, was forced to refund 118,000 payday loans worth $10m because of unscrupulous practices. Consumer advocates have raised particular concern about the continued shift to online payday lending, which they fear is allowing low-income and vulnerable Australians to take out fee-heavy, high-interest loans with little assessment of their ability to repay them. Guardian Australia has spoken with two former employees of one online lender, Cash Train, a business owned by the publicly listed Money3, which offers fast cash loans of up to $2,000. The two Cash Train loan underwriters, who both asked for anonymity, described a culture that pushed staff to approve as many loans as possible. Both said they were approving more than 20 loans a day. One employee claimed the company regularly approved loans to people with gambling problems. Cash Train has a policy to deny loans to anyone spending more than 50% of their income on gambling. The former underwriter said staff regularly circumvented that rule. “Obviously the unspoken thing is that if an application comes in at 49%, you’re OK to approve it,” the former staff member said. “It’s quite easy to overlook [betting expenditure] because people gamble in all sorts of ways. If you pretend you didn’t see the … bet, you could just say that it was 49%.” Asked whether he ever raised questions about the practice, he replied: “People wouldn’t have understood why I was asking.” But the company said it was proud of its efforts to prevent lending to problem gamblers. A spokesman for the company told Guardian Australia there was no legislative requirement not to lend to those with gambling problems but the company had nonetheless instituted its own responsible lending policy. “We go above and beyond what the legislation actually says,” the spokesman said. “Cash Train doesn’t seek to lend to these customers. We actually take quite a conservative approach. If we can ascertain that a customer is spending more than 50%, we don’t approve them.” The former loan underwriter claimed Cash Train employees were given only rudimentary training on consumer law, had little awareness of the legislative requirements and were unconcerned about a customer’s ability to repay. “They don’t really mind if people default on their first payment,” he said. “If they keep on defaulting, the company just keeps on making money.” The company again rejected the criticism. The spokesman said the training regime for staff was robust and that it was simply not in the interests of the company to lend to individuals who could not repay. The spokesman pointed to Money3’s low default rate – 2.5% in the first half of this year – as evidence of the company’s responsible lending. “We’re quite comfortable with our compliance program and also our training. I guess what’s occurred recently in the last 12 moths with the Cash Converters case further highlights the importance of that. “But I’m certainly comfortable with our practices and how we execute them.” A second former underwriter claimed she had also become concerned at the company’s multiple lending practices. She said Cash Train regularly gave money to people who were already repaying three or four payday loans with other companies. She said it was rare to come across a “clean” bank statement – one that didn’t include pre-existing payday loans. Underwriters were asked to use their discretion to determine whether another loan would be affordable for the individual. “That was one of my major concerns … it was a common thing to look at a bank statement and say he’s already got three or four others,” she claimed. “You’re paying at least 30% to 50% of your wages on direct debits going to other lenders. So without knowing it you’re quite dependent on these loans. “Before you know it, you’re in a debt spiral.” Australian law on multiple lending is open to interpretation. Where an individual has taken out two or more loans within 90 days, it is presumed that they are unsuitable. But that presumption can be “rebutted” by lenders if they deem that an individual has the ability to repay. The spokesman said Cash Train complied with legislative requirements on multiple lending, and said most customers had a low number of repeat claims. “It’s not in our interest to lend to people who can’t pay us back,” he said. The second former underwriter said staff at Cash Train were generally honest and well trained. The daily target of 21 was achievable for experienced staff, which lessened the pressure to issue loans. Staff were regularly audited, she said, to ensure they weren’t approving loans inappropriately. • Contact Christopher Knaus securely via Signal on +61 422 283 681 or using the SecureDrop server |