Happy family testimonial used by Money3 exposed as a sham

AUSTRALIA'S second-largest payday lender has been caught out using fake testimonials to lure customers into its high-interest loans.

THE Johnstons say they can rely on Money3's short-term, high-interest loans "for any little emergency". In another testimonial on the website of the nation's number two payday lender, father-of-three Garry says: "They really make an effort to understand my needs."

But both the Johnstons and Garry are fake. A Google image search reveals the "Johnstons" also need home insurance in Ireland and Canada. "Garry", meanwhile, is apparently a customer of a pallet manufacturer in Sweden.

A major ACCC-sanctioned investigation is underway into the use of false reviews in a bid to rope in prospective customers. News Corp has apprised consumer affairs authorities of the Money3 fakes.

"I apologise for misleading people," Money3 CEO Rob Bryant told Public Defender. The testimonials would be removed, he said

Money3 - which has a stock market worth of $100 million after a doubling in its share price in the past year - is expanding into the NSW market. It is doing so through the acquisition of The Cash Store, which Public Defender has repeatedly exposed as flouting the law. The Cash Store is now facing Federal Court action brought by ASIC.

ASIC says The Cash Store sold insurance to 183,000 small-amount short-term-loan customers from 2010 to 2012, collecting nearly $2.3 million in premiums, but only paying out $25,000. "The insurance was self-evidently unsuited," to the customers' needs, ASIC says in a statement of claim seen by Public Defender. ASIC alleges this was "unconscionable". It also claims The Cash Store breached the Credit Act by failing to make "reasonable inquiries about the customer's requirements".

After The Cash Store purchase is completed, Money3 will have 26 stores in Victoria, 17 in NSW, 15 in Queensland, seven in Tasmania and five in SA.

Money3's Mr Bryant said it hadn't previously operated in NSW because the state's 48 per cent short-term-loan interest rate cap was "unworkable".

Lenders could only charge $2.56 of interest on a $100 one-month loan (although other hefty fees were often levied).

But under a new national system introduced by the now federal Opposition Leader Bill Shorten when he was Financial Services Minister, $24 of interest can be charged on such a loan.

In other payday lender news, AMX Money has been placed in receivership after its new owners admitted it "may be breaching the National Consumer Credit Laws".

And the no. 1 payday lender Cash Converters is facing a $40 million class action for allegedly overcharging 50,000 NSW customers.

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