Loan company to repay $7m
Online lender Harmoney has agreed to repay $7 million to about 37,000 borrowers as part of a settlement with the Commerce Commission after admitting its platform fees were unreasonable.
The compensation comes after the company, which offers car loans among its range of products, over-charged customers between August 26, 2014, and August 25, 2021.
Harmoney will be contacting affected borrowers as part of the settlement, with the commission advising it may take up to two years to complete this process.
The company, which operates in New Zealand and Australia, started business in August 2014 and has charged customers a “platform fee” on loans arranged through its website.
The commission says the nature and amount of the fee has changed several times over the years, moving from an initial percentage-based fee of up to $1,500 to a fixed fee of up to $500.
Under the Credit Contracts and Consumer Finance Act (CCCFA), fees must be reasonable and cannot exceed the lender’s transaction-specific costs.
Harmoney has admitted its platform fee was an unreasonable establishment fee and agreed to charge no more than $165 for any establishment fee on new consumer loans for the next five years.
The commission will now apply for High Court declarations that Harmoney contravened section 41 of the CCCFA by charging unreasonable fees, which the lender has agreed not to oppose.
Anna Rawlings, pictured, chairwoman of the commission, says: “This settlement relates to legal proceedings that started in 2016, when the commission filed its initial High Court action seeking clarity about how the CCCFA applies to Harmoney’s loans and fees.
“Following the Court of Appeal’s confirmation in 2020 that Harmoney’s loans are consumer credit contracts that are subject to the CCCFA, Harmoney has now admitted that the platform fees it charged were unreasonable and it will provide compensation for borrowers who took out relevant loans.”
The commission has investigated a number of lenders in relation to unreasonable fees, with recent cases reaching settlement involving UDC Finance and Moola.
