A Melbourne woman has been paid $4,000 to drop a legal case against Cash Converters for allegedly making unfair contracts with her.

The woman, who wanted only to be known by her first name Kirsten, was offered the settlement after 774 ABC Melbourne exposed her history of high-interest loans with Cash Converters.

Kirsten believed she lost approximately $30,000 to the pawnbroker in the form of fees, interest and items over the past eight years.

She told her story as part of a year-long series Turning Points and the Melbourne-based Consumer Action Law Centre (CALC) then took her case on.

CALC argued Kirsten's case on the grounds of unconscionable conduct, namely that the company was loaning to her when it knew she would not be able to make full repayments.

"The more I looked into it the more I realised how serious what they've done is," Kirsten said.

"People need to know — I'm just a small fish amongst what this so-called business does and it's wrong, it disadvantages the disadvantaged."

Kirsten was paying the equivalent of 420 per cent interest per annum on monthly loan repayments while Cash Converters held valuable items she used to secure the loan, including her late mother's jewellery.

"I paid back everything I could. It wasn't a matter of going and getting a loan and never repaying it," she said.

Lawyers eager to challenge business model in court

CALC chief executive Gerard Brody said Kirsten's case was compelling enough that it could have presented a serious challenge to the pawnbroking business model if taken to court.

But because of Kirsten's history of social phobia and mental illness, she chose to take the company's $4,000 settlement offer rather than go through an extended court process.

"I was just frightened of the attention," she said.

Kirsten holds her son Lachlan. ( ABC Local: Clare Rawlinson )

"It wasn't about the money necessarily, it was principle."

Mr Brody said until tighter regulation was enacted, pawnbroking would continue to profit from people "on the margins of society".

"Pawnbroking has been taking advantage of some of the poorest people in the community ... the regulatory framework needs to be reformed, substantially reformed," he said.

"Consumer Action would like to mount a legal challenge against the pawnbroking business model.

"It may amount to unconscionable conduct for pawn loans to be continually extended resulting in long-term high-cost debt."

The ABC has contacted Cash Converters for comment.