The Trade Commission took legal action against payday lender Moola, alleging a breach of its responsible lending responsibilities between June 2015 and November 2017.
Moola, the trading name of NZ Fintech, offered short term loans with interest rates of 182.5% to 547.5% during this period.
The commission alleged that the loans were granted in violation of the principles of the Credit Agreements and Consumer Finance Act because Moola:
- failed to inquire to be satisfied with borrowers’ requirements and goals
- failed to inquire to be convinced of the borrowers’ ability to repay without substantial difficulty
- failed to exercise care, diligence and skill in text and email advertising
- failed to treat borrowers in a reasonable and ethical manner when breaches of loan agreements occurred
- failed to ensure loan agreements were not oppressive, including interest rates
- failed to ensure that it did not encourage borrowers to make deals through oppressive means.
NZ Fintech said it would defend the claim.
In a statement, chief executive Guy Randall said the company believes it is a best-practice operator.
“Moola loans are for short-term cash flow needs and are not suitable for all situations, we say this very clearly,” he said.
“Moola has a strong focus on compliance and strives to be the industry leader in this area. We are not always 100% right. When we make a mistake, we fix it.
“It is unfortunate that the Trade Commission has decided to seek court advice, but we will defend the claim and welcome any clarity on responsible lending practices that can ultimately be provided.”
The company said it cooperated with the commission’s investigations.
“The client and Moola have a common interest in the client’s ability to repay their loan. As the loan is unsecured with little or no recourse available to the lender, we have a vested interest in ensuring that the onboarding process for new clients identifies and mitigates the risk of hardship. “
The commission said it was seeking reimbursement of borrowing costs from 50 identified borrowers, an injunction preventing new loans without ensuring the company meets its obligations and making statements that the conduct was in violation of the law.
NZ FinTech is a past winner of a Deloitte Fast 50 award for the fastest growing tech company.
Its owners are Edward Recordon, Steve Brooks and James Cooney, according to Companies Office records.