Ordinary Australian families are getting surprise windfalls of thousands of dollars from banks and lenders that sold them junk insurance.
Australian start-up Claimo is seeking refunds from banks on behalf of customers, securing more than $5 million for 1600 people in its first year, on a no-win, no-fee basis.
Many punters don't even realise they are eligible – but the big four banks, which have provisioned a $4 billion kitty for payouts, and other finance companies are prepared to pay up when claims are made.
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Among successful applicants is Susan Peterson, a business support officer from Queensland, who has got back almost $43,000 for unnecessary insurance on a car loan, credit card and mortgage.
"It's great – obviously it's money that's better off in our pocket," she says.
"This is money that we paid in good faith thinking it was a product that we could use. Considering the current environment and everything that everyone has been through in the past 18 months, it's nice to have a bit of a win."
Another is Lismore mum and disability worker Nicole Gallpen, who was hoping to get about $600 back from three add-on charges on a car loan but ended up with $9530.
"Obviously I'm really happy we got the money back but looking back, I guess we were really naive in not reading through or questioning more in terms of what we were signing and what we were being charged for on that car loan," she said.
"We got the loan and the extra insurance was presented as a necessity – we had to take it out to get the car loan. It was presented to us that if we didn't agree, we couldn't get the car loan."
She has since discovered two more types of charges were added without their consent, meaning they were entitled to a bigger refund than they'd expected.
The 2018 Banking Royal Commission heard many customers were unknowingly sold add-on or "junk insurance" policies when they sign for a credit card or loan.
It's an extra fee often described in small print as "consumer credit insurance", "loan protection insurance", "credit card insurance" or similar.
As a result, ASIC estimates $3.55 billion is owed in refunds to more than 3.6 million Australian consumers.
While the big banks are paying refunds, NAB was subject to a class action so the courts are dealing with these cases separately. However, Claimo says customers who were sold nab products with junk insurance before 2008 can still claim.
Claimo CEO Nathan Mortlock says most people have no idea they have been charged – and he recommends they call their current and previous lenders or credit card providers to find out as a first step.
As long as you have documentation to prove it, you can claim as far back as 1989.
"The best phone call of the day is when you're telling people they are getting money back," he said.
"We get a lot of smiles and giggles when we give them the good news."
Claimo charges a 20 per cent fee from clients for successful cases. Clients like Susan Peterson and Nicole Gallpen reckon it's worth it: they don't have the time and expertise to make a claim and got back more than they expected.