Rachelle* was 17 and a little short on cash when she borrowed $60 early last year from online payday lender Cigno.
Since then, her quick cash remedy has morphed into a current debt of $800 she admits she is struggling to pay back.
"In just two clicks it was in my bank," said Rachelle, who is using a pseudonym to protect her identity.
"But it doesn't tell you how much it's going to take from you. It doesn't tell you how much the late fee is. It basically tells you nothing.
"The repayments just keep rising and rising."
The now 18-year-old from Palm Island in north Queensland is among hundreds of borrowers who have been caught out by the controversial lending scheme which consumer advocates describe as "one of the most harmful individual credit products on the market".
"They only got a small amount but are now paying 10 times that."
'Rapid, harmful debt spirals'
Cigno is a Gold Coast company that processes same-day cash loans, and whose director and CEO is former super rugby player Mark Swanepoel.
Rachelle said Cigno used Facebook advertisements to target customers like herself.
Her story is all too common for consumer advocates, who are calling for the Australian Securities and Investment Commission (ASIC) to outlaw the lending models that Cigno processes.
In 2020, ASIC commenced court action against Cigno and its provider BHF Solutions, alleging they contravened the National Consumer Credit Protection Act.
The Federal Court dismissed ASIC's application in June 2021, and the Full Federal Court has since reserved its decision on ASIC's appeal.
Separately, ASIC has sought public feedback to help it decide whether to exercise product intervention powers that would prohibit Cigno's short-term credit model.
In a joint submission to ASIC, the Consumer Action Law Centre, Financial Rights Legal Centre, the Indigenous Consumer Assistance Network (ICAN), the Victorian Aboriginal Legal Service and WEjustice said the loans were pushing people into rapid and more harmful debt spirals.
"Virtually every consumer we have seen that has taken out such a loan has suffered significant detriment as a result," their submission said.
"For an unregulated fringe loan scheme to appear more often in casework than any other major bank or payday lender is a telling indicator of the harm that these loans are causing in the community."
Fast money
Cigno offers loans of up to $1,000 that can be fast-tracked if the customer wants the money immediately.
The company has told the ABC that before agreeing to a loan, customers acknowledged they were over 18 years old and of sound mind and judgement to make their own financial decisions.
Rachelle, however, said there was no proof required when she ticked the terms and conditions box.
ICAN operations manager Jillian Williams said the onus was on Cigno.
"The consumer law protections in Australia are very clear that the responsibility lies with the creditor to assess a person's ability to repay a loan," Ms Williams said.
"Unfortunately with Cigno … they operate outside these protections.
"We're seeing account-keeping fees of $5.95, dishonour letter fees of $50, second dishonour letter fees of $79, the dishonour fee itself of $49, a collection of tracking fee of $50."
'Two sides to every story'
In Cigno's own submission to ASIC, chief executive Mark Swanepoel said "there are two sides to every story".
"ASIC and the mainstream media claim we prey on the vulnerable and less sophisticated, charging all our customers exorbitant fees and exploiting the very people we claim to be helping," Mr Swanepoel wrote.
"The reality is that ASIC, the government regulator, have formed their view based on a very small percentage of our customers."
Mr Swanepoel also accused ASIC of skewing information.
"We are fighting a large group of hypocrites – the leaches [sic] of society who steal more and more freedom and choices from everyday people behind the veil of good intentions," he wrote.
In a further statement to the ABC, Cigno said fees were added [to customers' loans] in return for not completing the commitment.
"Cigno is extremely transparent about the cost of using our services as it was always explained in the application process," a complaints manager said.
"Furthermore, we send regular payment reminders via email and SMS two days before a payment is due … despite this, some of them only try to contact us [sic] recently."
ASIC will seek the approval of federal Treasurer Josh Frydenberg before deciding whether to exercise its product intervention powers again.
Life on hold
Rachelle said her credit history had not recovered since borrowing from Cigno and it was affecting her future.
"You really want to pay it [back], but you don't want to pay that much," she said.
"I've been knocked back from a lot of places, like car loans.
"Just from a silly $60, Cigno has put me in debt. I'm not able to get anything anymore."
*Name changed to protect identity
