Short-term lender Moola has reached a $2.8 million settlement with the Commerce Commission, accepting that fees charged to customers were unreasonable.
Moola offers easily accessible short-term loans of up to $5000 via its two websites, moola.co.nz and needcashtoday.co.nz.
Following an investigation into Moola’s fees, the Commerce Commission confirmed on Wednesday that the charges were found to be in breach of the Credit Contracts and Consumer Finance Act 2003 (CCCFA). Moola has agreed to a $2.8 million settlement, acknowledging the Commission’s view that credit and default fees on loans taken out between February 2016 and July 2017 were unreasonable.
Moola will issue around $2.8 million in credits or refunds to affected customers within the next 12 months. The amount of the credit or refund will be the difference between the actual fee charged to the customer and the reasonable fee calculated by the Commission.
Following complaints from a budgeting service and concerns raised by the District Court about the level of Moola’s fees, the Commerce Commission was invited to intervene in debt recovery proceedings in September 2017.
During the investigation, it found default fees of $60 were charged, where the reasonable fee calculated by the Commission was between $10.24 and $15.66 (depending on when the fee was charged).
Fees charged to set up loans (establishment fees) were either $150 or $350 depending on the loan term, where the reasonable fee was either $4.47 or $5.48. Moola charged processing fees of $50, where the reasonable fee calculated by the Commission was either $10.86 or $12.25.
Commission chair Anna Rawlings said fees charged by Moola between 2016 and 2017 weren’t closely aligned to its activities.
"We consider that during the relevant period, Moola’s default fee, establishment fee and processing fee recovered costs that weren’t closely related to the matter for which the fees were being charged, as required by the CCCFA," Rawlings said.
"Moola acknowledges our view and has undertaken to credit or refund affected customers the difference between the fee charged and the fee we calculated was a reasonable fee."
The Commission also said Moola had cooperated with its review and reduced its fees before and during the investigation. In June 2020, Moola introduced a cap on the daily rate charge.
Due to business disruptions caused by COVID-19, Moola was given six months to calculate the refunds it owed customers.
Moola confirmed to the Commission that affected customers have been identified. The difference between the amount charged by Moola and the reasonable amount put forward by the Commission has been calculated.
Customers who took out loans between February 2016 and July 2017 identified by Moola as having been charged unreasonable fees can expect to receive a credit or refund within the next 12 months.
Customers are encouraged to check the Moola website for updates.