The Commerce Commission says it is to begin High Court proceedings against NZ Fintech Ltd - trading as Moola - alleging that it has breached the lender responsibility principles contained in the Credit Contracts and Consumer Finance Act 2003 (CCCFA).
The Commission says Moola provides high cost short term loans up to $5,000 via the moola.co.nz and needcashtoday.co.nz websites.
It says its proceedings relate to Moola’s conduct between June 2015 and November 2017 when, it says, Moola offered short-term loans with interest rates of up to 547% per annum.
The Commission alleges that Moola failed to exercise the care, diligence and skill of a responsible lender, as required by the lender responsibility principles, in that it:
- failed to make inquiries so as to be satisfied of the borrowers’ requirements and objectives;
- failed to make inquiries so as to be satisfied of the borrowers’ ability to repay without substantial hardship;
- failed to exercise care, diligence and skill in text and email advertising;
- failed to treat borrowers reasonably and ethically when breaches of loan agreements occurred;
- failed to ensure loan agreements were not oppressive, including interest rates;
- failed to ensure it did not induce borrowers to enter into agreements by oppressive means.
The Commission says that in all causes of action it seeks:
- declarations that Moola’s conduct breached the CCCFA;
- injunctive relief preventing Moola from new lending without taking specified steps to ensure it meets its legal obligations;
- cost of borrowing to be returned to 50 identified borrowers;
- orders for consequential relief as the Court thinks fit;
- interest and/or costs.
The Commission says lenders entering into consumer credit contracts after 6 June 2015 are required to comply with the lender responsibility principles, as set out in the CCCFA.
These include that lenders must make reasonable inquiries, before entering the agreement, to be satisfied it is likely the borrower will make repayments without suffering substantial hardship.
In June 2018 the Commission launched a lender website review, which looked at the websites of 215 lenders to determine if they were likely to be complying with their responsibilities under the CCCFA. It showed annual interest rates of up to 803% and more than 500 different named fees.