Online lender in hot water

The high court has granted the declarations sought by the Commerce Commission that Moola.co.nz Ltd engaged in cartel conduct relating to online advertising.

Its conduct involved the Christchurch-based company reaching agreements with other consumer credit or loan providers to not bid on each other’s brand names on Google Ads.

It also involved using “negatively matching” for certain keywords so their adverts wouldn’t show when those keywords were used. 

Commission chair Anna Rawlings says this conduct meant people searching for a consumer credit provider on Google may not see ads for other loan providers, limiting their access to information about alternative companies and services. 

This is likely to have reduced the ability of consumers to make informed choices when selecting a provider.

“Competitive keyword advertising is important for businesses and consumers alike,” says Rawlings. 

“It allows businesses to have their online ads shown to potential customers when they are actively searching for the relevant products and services, and consumers benefit from obtaining information on competing products and services in response to searches for a particular brand.

“By restricting competitive keyword advertising, these agreements may have resulted in consumers paying higher prices and acquiring finance services on unfavourable or less suitable terms. 

“The likelihood of harm would have been higher for vulnerable consumers with less experience and knowledge about finance companies.”

The regulator filed proceedings against Moola, which provides high-cost, short-term loans of up to $5,000, in July 2021 seeking declarations that it entered into and gave effect to agreements that breached cartel provisions of the Commerce Act.

Moola co-operated with the commission’s investigation, accepted it contravened the law and agreed to declarations being made by the court.

About Google Ads

Google Ads enable a company to have its advert displayed alongside the results of a Google search.

Companies can pay to display their products and services as an advertisement in response to a search for a particular word or phrase. 

The display ranking of an ad and the amount paid by the advertiser to Google Ads is determined by a live second-price auction or spot market.

“Negatively matching” keywords prevents certain ads from being triggered by a certain word or phrase, meaning certain adverts will not display to anyone who is searching for that word or phrase.