News

Consumer Action Law Centre (Consumer Action) has secured a comprehensive victory in the Federal Court of Australia against Taylors Business Pty Ltd (Taylors), in a judgment handed down yesterday that is expected to have major national implications for Australia’s broken pawnbroking industry.

Consumer Action brought the case on behalf of a group of Victorians who pawned goods of deep personal and financial value—only to find themselves unable to reclaim them after Taylors Business abruptly shut its Delahey shop in July 2023. The Court has now found that Taylors Business systematically breached multiple credit and consumer laws, operated without a licence, and charged illegal, extortionate interest rates equivalent to 480% per annum.

Consumer Action CEO Stephanie Tonkin said she was delighted by the courts decision.

“Firstly, I would like to deeply thank the hundreds of class action members for their patience, they have waited more than two years for this outcome, without their items of value, which is long overdue. Also, I want to say how proud I am of Consumer Action’s expert legal team, which has worked tirelessly on this case, and brought it to a successful resolution.”

Ms Tonkin said the ruling was important because it “sends a thunderbolt” through an industry that has operated outside proper scrutiny for far too long.

“This judgment exposes just how broken the pawnbroking industry is in Australia,” Ms Tonkin said.

“People who can’t access regulated credit products are using pawnbroking businesses without time limits on contracts, facing grossly inadequate licensing laws and uncapped interest – it’s one of the clearest examples of a poverty premium.

She said the ruling should trigger urgent national reform.

“This case has cracked open the door to systematic reform of Australia’s archaic pawnbroking laws,” Ms Tonkin said.

Findings in the class action
The Court found that from 15 November 2022, Taylors Business:
• Operated unregistered as a pawnbroker under the Second Hand Dealers and Pawnbrokers Act
• Did not qualify for the pawnbroker exemption under the National Consumer Credit Protection Act and National Credit Code
• Engaged in unlicensed credit activity because it did not hold an Australian Credit Licence
• Charged prohibited interest rates equivalent to 480% per annum—ten times the lawful limit in Victoria.

As a result, the Court declared 2150 contracts void and unenforceable. There will be a further hearing in February 2026 to determine what compensation Taylors Business should pay to affected customers.

Earlier in the year, the Court declared that Taylors Business had abandoned the Pawned Goods that were the subject of the class action, and Consumer Action is in the process of returning over 1700 items to their rightful owners.

It is currently thought that Taylors Business is insolvent and will not have any money to pay affected consumers. This is a particularly harsh outcome for the roughly 145 Group Members whose goods were not found amongst the goods abandoned by Taylors Business.

The outcome for those who have lost their goods without compensation is an unacceptable result and should prompt the need for urgent national reform. Alternatively, the abolition or major overhaul of an industry that charges uncapped interest to vulnerable consumers seems like an outcome that should be welcomed by both consumer advocates and the mainstream finance industry alike.

A win for people in financial hardship
Consumer Action became involved in this dispute following a spike in calls from distressed customers, many concerned they had permanently lost goods such as jewellery, tools of trade, and family heirlooms.

“People pawn items because they’re desperate,” Ms Tonkin said. “But instead of helping, unlawful operators like Taylors Business were dragging people deeper into hardship. This decision puts the industry on notice: exploitative conduct won’t be tolerated.”

Next steps
The Court has ordered that Taylors Business must return all remaining pawned goods still in its possession and compensate affected customers. Further orders will address the protection and return of goods and the award of financial remedies.

Ms Tonkin said the case demonstrates why national reform must not be delayed.

“This win is a turning point, and now government must step up and fix the laws and business misconduct that allowed this harm to occur in the first place.”

Consumers with questions about the class action can ask questions here.

ENDS

Media contact:  Mark Pearce  mark@consumeraction.org.au  Tel: 0413 299 567