Payday lender Cash in a Flash refunds customers after Commerce Commission warning

Thursday, 17 March 2016

A payday lender has refunded customers $122,365 after the Commerce Commission warned it was likely to have breached lending laws.

Cash in a Flash offers short-term loans of up to $1000 that can be approved in less than an hour, according to its website.

The interest rate charged works out to 584 per cent a year, or a discount of 'just 438 per cent for returning customers'.

The commission said it had told the company its contracts were unlikely to comply with the Credit Contracts and Consumer Finance Act, which was was amended in June last year.

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The key changes make lenders disclose more information before the contract is actually signed.

Cash in a Flash's omissions included its registration number, dispute resolution scheme details, and the borrower's right to apply for relief for unforeseen hardship.

According to the commission, the payday lender quickly and voluntarily refunded interest and credit fees to customers.

It also stopped pursuing interest and credit fees not yet paid, and corrected its disclosure.

After considering the company's actions, the commission decided to issue it a warning rather than prosecuting.

Commissioner Anna Rawlings said clear disclosure was essential for customers to understand what they were agreeing to.

'It has been nine months since the amended consumer credit law came into force and we are regularly taking enforcement action to protect consumers from lenders who break the law.'

The Commission has begun a project reviewing how well payday lenders were complying with the recently amended law.

It said it would be visiting a number of companies to review their documents and lending practices.

Enforcement action, including court action, would be taken when appropriate.