A high-cost lender that charged interest as high as 803 per cent has been forced to repay dozens of borrowers after it failed to make sure its clients really needed the money, and failed to exercise care with its advertising.
Finland-based Ferratum, which also traded as "Just Cash" and "Simple Cash", has settled with the Commerce Commission after admitting it breached the Credit Contracts and Consumer Finance Act (CCCFA).
Commission chair Anna Rawlings said Ferratum admitted it did not meet its responsibilities.
"The lender responsibility principles require all lenders to exercise the care, diligence and skill of a responsible lender in their dealings with borrowers and guarantors, and to comply with the specific responsibilities set out in the CCCFA. Ferratum has admitted it did not live up to its responsibilities."
The company admitted breaches between the period of June 2015 and October 2018.
During this time it issued loans between $100 and $1000, charging interest of between 52 percent and 803 percent per annum.
It has to repay 46 borrowers more than $88,000 and has agreed not to offer more money to borrowers who already have a loan, have failed to make payments or have repaid the loan recently.
"Lenders should carefully consider who they are sending direct advertising to. They should not send direct advertising - for example, via text - to borrowers who are overdue on existing payments, inviting them to apply for new or larger loans," Rawlings said.
"We note that recent changes to the CCCFA make it unlawful to lend to a borrower who already has, or has recently had, high-cost loans with other lenders."
The Commission also planned to take Ferratum to the High Court, to seek its declaration that the Act had been breached.