ComCom sues Moola over 547% payday loans

The Commerce Commission has filed legal action against payday lender Moola alleging breach of its responsibilities for responsible lending 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 that period.

The commission alleged loans were provided in breach of principles in the Credit Contracts and Consumer Finance Act because Moola:

• 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.

NZ Fintech said it would be defending the claim.

In a statement, chief executive Guy Randall said the company was confident it was a best practice operator.

“Moola loans are for short-term cashflow needs and are not suitable for every situation, we make this very clear,” he said.

“Moola has a strong focus on compliance and strives to be industry leading in this area.  We don’t always get it 100% right. When we do make a mistake, we fix it.

“It is unfortunate the Commerce Commission has decided to seek guidance from the court, however we will defend the claim and welcome any clarity about responsible lending practices that can ultimately be provided.”

The company said it had cooperated with the commission’s inquiries.

“The customer and Moola have a shared interest in the customer’s ability to repay their loan. As the loan is unsecured with little to no recourse available to the lender, we have a strong interest in ensuring that the on-boarding process of new customers identifies and mitigates the risk of hardship.”

The commission said it was seeking the return of borrowing costs to 50 identified borrowers, injunctive relief preventing new lending without ensuring the company meets its obligations and declarations that the conduct was in breach of the Act.

NZ FinTech is a past winner of a Deloitte Fast 50 award for fastest growing technology company.

Its owners are Edward Recordon, Steve Brooks and James Cooney, according to Companies Office records.