Laura Platt desperately needed money to repair her car when she saw an advertisement for Cigno, which spruiked "fast cash loans of up to $1,000".
Ms Platt uploaded a bank statement to Cigno's website and a few hours later $300 landed in her bank account.
"It was approved, straightaway. And I didn't really look into the fine detail," Ms Platt said.
Not long after getting her first loan with Cigno, she successfully applied for an amount of $200, because she thought she had repaid her original debt.
However, Ms Platt did not realise her loan of $300 had also incurred high account-keeping fees.
She has struggled to repay the loans. Two years later, after being hit with account-keeping and late fees, she ended up paying Cigno $2,600, of which she still owes $32.
"[I am] completely confused and stressed because I've already paid the money off," she said.
Legal loopholes
Consumer advocates say Ms Platt is one of many Cigno customers who have found themselves in a debt spiral after signing up for a loan with the Gold Coast-based company.
On its website, Cigno advertises products like "Centrelink Loans with No Credit Check", "Bad Credit Centrelink Loans", "Payday Loans for Centrelink Customers" and "Online Loans for Centrelink Customers".
"This lending model is causing more harm than any other form of credit," Tom Abourizk, the Consumer Acton Law Centre's policy director, said.
The corporate regulator ASIC has been in a game of cat and mouse with Cigno for years.
The company gets around credit laws by using exemptions in the National Credit Code.
"It's loan-shark activity, and it's desperate that it needs to be stopped as soon as possible," Mr Abourizk said.
Buy now, pay later companies and wage advance products are also currently exempt from credit laws.
On July 15, ASIC used its special powers of intervention to ban the lending models for short-term and continuous credit used by Cigno and its associated lending entity BHF Solutions.
ASIC had already banned one of those lending models in another intervention order, but that order expired in 2021.
It came after ASIC won in its appeal before the Full Federal Court against Cigno and BHF Solutions last month, in a decision which sided with the regulator's position that the companies were offering a form of credit captured by the National Credit Code because of the amount of fees they charged.
It reversed a decision by the Federal Court in June 2021.
The judgement included the example of a woman who, assuming she made her payments on time, was expected to pay $177.75 in fees for a $200 loan and $231.80 in fees for a $300 loan.
On Monday, Cigno and BHF Solutions lodged an application to seek leave from the High Court to appeal against the Federal Court's decision. The High Court will need to consider whether or not to hear the appeal.
Meanwhile, Cigno is still offering loans on its website with fees that are slightly lower than those referenced in the Federal Court's judgement.
According to Cigno's website, customers must pay lender's costs and Cigno service charges.
The company says a typical $300 loan "might look like this": A Cigno account-keeping fee of $129.90, and additional fees of $15 for changing repayments, a $79 dishonour fee and a $20 lender-default penalty.
The website also states the cost will "vary depending on loan and payment options that you choose".
A spokeswoman for ASIC said the regulator was investigating whether the model was legal.
"ASIC is aware that Cigno (Cigno Australia Pty Ltd) continues to offer services to arrange loans on its website. ASIC is looking at the lending product and model including whether the conduct is in breach of the Product Interventions Orders," a spokeswoman for ASIC said.
If so, it would be the third time Cigno has created a new lending model to get around ASIC's bans and credit laws.
"Cigno's website looks as though it's still business as usual," Mr Abourizk said.
"It means that people can still be gouged with the same excessive fees as they have been charging on the loans that they've arranged to date."
Small loans generate big profits
The amount of money Cigno has been making from its loans is far from small change.
The company's full financial history is not public, but Federal Court documents show that in a five-and-a-half-month period, Cigno arranged 166,045 loans totalling over $46 million, and the total amount charged in fees (on top of the principal) for these loans was more than $61 million.
Cigno describes itself as an "agent to help you obtain a loan from lenders" rather than as a lender itself.
BHF Solutions describes itself as "Australia's leading expert in business consulting and financial advisory".
The ABC has contacted Cigno, BHF Solutions and the offices of solicitors acting on behalf of the two companies but did not get a response by publication deadline.
Financial Counselling Australia chief executive Fiona Guthrie said the federal government must urgently act to update Australia's credit laws.
"As soon as the regulators try and close one hole in the law, they find another," she said.
Mr Abourizk said, depending on the outcome of the court proceedings, CALC would encourage ASIC to look at avenues for compensating Cigno's customers.
"If there is any scope for a remediation or a compensation project they should absolutely be examining that," he said.
"Our concern is that they might find that the cupboards are bare if it gets to that point with Cigno, as other predatory lenders like this have done in the past."
'Predatory company'
Ms Guthrie said Cigno's model targeted vulnerable people.
"Financial counsellors would describe them as a predatory company," she said.
Ms Guthrie is hopeful the High Court will reject BHF Solutions and Cigno's application to hear its appeal.
"We cannot have companies like this operating in the Australian marketplace, it is so dangerous," she said.
"There are costs for the broader community because we end up with people in financial and mental stress. They end up in hospital and they end up at food-relief services."
"It's pretty clearly credit. It's an avoided credit lending model. And there is no legal reason that it should go ahead."
Ms Platt said her struggle to repay the fees added to her loan amount meant she had been forced to cut back on essentials such as groceries.
"They are cold hearted and greedy and evil. They're horrible," Ms Platt said.
"I would never ever recommend them."
