A small loan provider has been forced to pay $30,600 in penalties for making misleading representations in its online advertisements.
Paid International, formerly known as First Stop Money, paid the fines after ASIC issued three infringement notices each with a penalty of $10,200.
The small amount lender, which operates nationally online, said it offered “instant decisions” and loan approvals “within minutes” for loans on websites operated by Paid International at firststopmoney.com.au, loanspronto.com.au and paydayplus.com.au.
ASIC was concerned the ads were false or misleading because the lender’s assessment of a loan application was not ‘instant’ or completed ‘within minutes’. In some cases, loan applications took up to 72 hours to be assessed.
The corporate watchdog makes sure lenders adhere to their obligations to help reduce the risk that overcommitted consumers find themselves in a debt spiral, deputy chairman Peter Kell said.
“This is another example of a small amount lender making statements on its website that indicate a concerning lack of awareness about the responsible lending laws, and an apparent disregard for their responsibility to avoid making misleading statements in their advertising.”
Credit licensees must make reasonable enquiries about the consumer, verify their financial situation and assess the suitability of the loan for that particular consumer before providing them with a loan. It is not appropriate or possible for a small amount lender or any other credit licensee to make an instant decision or approve a loan ‘within minutes’ if they are complying with their obligations, ASIC warned.
ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws, and paying an infringement notice is not an admission the ASIC Act has been flouted.
In February, finance broking company Jeremy was fined $20,400 after ASIC said it made false or misleading representations on its websites of “guaranteed car finance” to consumers.
ASIC was concerned because an unconditional guarantee that finance can be provided is inconsistent with responsible lending laws.
Last October, online small amount lender Ferratum Australia was fined $10,200 after ASIC found the company was advertising a “free $100 loan” on its website, in TV adverts and automatic teller machine screens.
ASIC believed the free loan promotion was misleading as transaction fees applied to the first $100 of the loan.
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