Eagle Man Loans charged an interest rate of up to 182.5 percent per annum in some cases. Photo: 123RF
Christchurch-based Eagle MAN Group (trading as Eagle Man Loans) has been fined $200,000 in the High Court at Christchurch for charging customers as much as 182.5 percent interest on short and medium-term loans.
The Commerce Commission said Eagle Man breached multiple aspects of the Credit Contracts and Consumer Finance Act (CCCFA).
Eagle Man targeted vulnerable customers who were financially strained, recent immigrants or on temporary work visas, Commerce Commission deputy chairperson Anne Callinan said.
"In some instances, Eagle Man charged an interest rate of 182.5 percent per annum, on top of credit and default fees. This could saddle consumers with significant debt that is more than the amount they borrowed," she said.
It was the commission's first case under the CCCFA.
Under the CCCFA, lenders that offer loans with an interest rate of more than 50 percent were considered to be high-cost lenders and needed to meet specific requirements.
However, the commission said Eagle Man did not meet the requirements when it issued loans with interest rates and fees that exceeded the amount of the first loan advance and gave repeat high-cost loans to borrowers, in addition to failing to disclose key information about the loan to borrowers.
"This court ruling is significant as it shows these breaches were systemic and the penalty reflects the overarching scope and scale of the high-cost loan breaches - 59 percent of consumers faced breaches which is unacceptable," Callinan said.
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