At Christmas, no one should have to pawn their life away
An edited version of this opinion piece appeared in the Herald Sun today.
By Stephanie Tonkin
Christmas is meant to be a time of generosity and hope. Yet for too many Australians, it’s a season of quiet desperation — a time when people are forced to pawn their most personal belongings simply to get by.
Every year, people on the lowest incomes walk into pawnshops carrying wedding rings, tools of trade, gaming consoles and family heirlooms. They do not do it lightly. They do it because they feel they have no other choice. They know the price will be steep, but when rent is due, grocery prices are rising and children are waiting for Christmas presents, desperation wins.
We hear the consequences through calls to the National Debt Helpline. Pawn loans come with outrageous interest rates. Miss a payment, misunderstand the fine print, or fall behind by even a small amount, and what was meant to be a short-term solution quickly becomes a debt trap — or worse, the permanent loss of something irreplaceable.
At Consumer Action Law Centre, we see firsthand how the pawn industry preys on vulnerability. People experiencing financial hardship, family violence, disability or illness can be disproportionately affected. And at Christmas, when financial pressure peaks, the risks multiply.
That is why we are calling for major reform of the pawn industry.
Two years ago, Consumer Action took action against pawnbroker Taylor’s Business, representing Victorians who had pawned their goods only to be locked out when Taylor’s abruptly shut its Delahey store. Borrowers were denied their belongings and charged eye-watering costs. Taylor’s insisted its conduct was lawful.
Last week, the Federal Court disagreed. It found that Taylor’s systematically breached credit and consumer laws, operated without a licence, and charged extortionate interest rates equivalent to 480 per cent per annum – ten times what would be illegal in any other part of the lending market. As a result, 850 consumers are now entitled to the return of their goods and compensation for interest paid.
The Federal Court is holding Taylor’s to account. But the outcome also exposes how broken the system is. Even so-called “legitimate” pawnbroking often drives people deeper into debt. For antiquated reasons that have no place in a modern financial system, pawnbrokers are still legally allowed to charge desperate people exorbitant interest rates.
What kind of community allows people to lose their belongings, their stability and their dignity just to get through the festive season?
Government is on notice. The rules that allow this exploitation must change. This Christmas, fairness should not be a luxury — and vulnerable Australians should not keep paying the highest price.
ENDS
Media contact: Mark Pearce mark@consumeraction.org.au Tel: 0413 299 567
