ASIC sues online lender for unconscionable debt recovery processes

ASIC is suing CashnGo for misconduct in the provision of small amount credit contracts. The action highlights ASIC’s regulatory focus on high-volume consumer lenders, particularly where systemic practices may contribute to financial hardship among vulnerable consumers.

ASIC alleges that CashnGo engaged in a range of harmful practices including:

• conducting unscheduled direct debits from borrower bank accounts after a default, often leaving borrowers with less than $5 remaining in their account;
• employing unfair contract terms; and
• failing to issue compliant direct debit default notices to over 67,000 consumers.

ASIC says CashnGo monitored consumer bank accounts via third-party connections on an hourly basis and initiated debits immediately upon the detection of available funds. ASIC alleges that CashnGo knew, or ought to have foreseen, that by defaulting consumers they would experience financial hardship and/or be unable to access necessary living expenses.

These allegations follow a broader regulatory trend targeting high-risk lending models, particularly where automated systems or aggressive recovery methods are used against financially vulnerable consumers. For any credit provider using similar account-monitoring or automated debit technologies, this case serves as a reminder of the need to ensure consumer protections are firmly in place.

All credit licensees, especially those offering small amount or high-frequency credit products, should closely review their debt recovery practices, contract terms, and consumer hardship procedures. If you require assistance in reviewing your current lending model or ensuring compliance with your credit licence obligations, please contact Chris Mee at cmee@cnmlegal.com.au or call 07 3211 4010.