Rapid Loans agrees to compensate borrowers
The Commerce Commission says internet-based lender Rapid Loans NZ Ltd has agreed to compensate borrowers approximately $1.4 million after a Commission investigation into unreasonable fees.
It says its investigation found Rapid Loans had charged unreasonable establishment, monthly administration or default fees on more than 6000 loans during the period 1 July 2013 to 30 June 2015. Rapid Loans revised its fees after this period.
Under a settlement agreement with the Commission, Rapid Loans will either credit existing loans of affected borrowers or provide cash refunds to those who had already paid their loans off. The total amount to be paid includes an added 5% to reflect the borrowers’ lost opportunity to use the money.
Commissioner Anna Rawlings says the Rapid Loans investigation was triggered by a complaint from a budget advisor concerned about the high fees being applied.
“Lenders need to make sure that their credit fees are reasonable as required by the Credit Contracts and Consumer Finance Act. Credit fees should only cover costs that are closely related to the particular loan transaction, as was reinforced in the Supreme Court last year,” she says.
“In this case, the fees were more than Rapid Loans actual reasonable costs in setting up a loan, administering it or in dealing with a borrowers’ default. We recognise that Rapid Loans did not set out to breach the Act, but its incorrect calculations meant a number of its clients paid more than they should have. It also made it difficult for borrowers to compare the cost of its products with loans from other lenders. We are pleased to secure an agreement that will see money returned or credited to Rapid Loans’ affected customers."
Last updated on the 16th September 2019