Federal Court Orders CashnGo to Pay AUD $3.5 Million Penalty for Unfair Contract Terms

Key Takeaways

• ASIC successfully prosecuted CashnGo for embedding unfair contract terms in over 201,000 small amount credit contracts, resulting in a AUD $3.5 Million penalty and multiple contract terms being declared void.
• The case underscores ASIC's intensified scrutiny of the SACC sector and signals heightened enforcement risk for lenders using automated debt collection practices that strip consumers of control over their finances.

Deep Dive

This enforcement action represents one of ASIC's most significant actions under the unfair contract terms civil penalty regime, which only came into effect in November 2023. CashnGo admitted to 190,546 contraventions for entering contracts with unfair terms, at least 658,000 contraventions for applying those terms in debt collection, and 67,545 failures to provide compliant default notices. The scale of contraventions—spanning over 85,000 consumers—demonstrates that regulators will pursue systemic, high-volume misconduct even where individual harm amounts may be small, particularly where vulnerable consumers are affected.

For compliance teams, the key takeaway is the Court's finding that automated systems enabling unscheduled, non-consensual withdrawals from consumer accounts—without notice or opt-out—constitute unfair contract terms. This has direct implications for any credit provider using direct debit authorities, bank feed monitoring, or automated recovery systems. Compliance teams should review default terms, authority terms, indemnity clauses, and limitation of liability provisions in standard form contracts to ensure consumers retain meaningful control over withdrawal timing and amounts, including clear opt-out mechanisms.

Key timelines include the voiding of Default and Authority Terms effective 14 September 2026, with replacement terms required by that date, and retrospective voiding (ab initio) of Indemnity and Limitation of Liability terms back to 20 April 2022. The penalty is payable in installments over two years, and CashnGo must publish consumer notices and is permanently restrained from using substantially similar unfair terms going forward.

Recommended actions include: (1) conducting an urgent audit of standard form consumer contracts for similar automated withdrawal, indemnity, or liability limitation clauses; (2) ensuring default notice procedures comply with s87 of the National Credit Code; (3) implementing consumer opt-out mechanisms for any automated debt recovery practices; (4) reviewing governance oversight, given the Court's finding that contraventions stemmed from senior management and director-level systems and practices, not isolated staff conduct. The case signals heightened regulatory and reputational risk for the broader SACC and consumer lending sector, with ASIC explicitly flagging continued focus on this space following REP 805 and the Cigno/BSF Solutions precedent.

Source: Australian Securities and Investments Commission