Budget Loans’ appeal against 106 misrepresentation charges under the Fair Trading Act 1986 (FTA) was dismissed at the High Court of Auckland, with Justice Moore stating that the lender’s offending was “among the most serious of its kind.”
Budget Loans was fined $720,000 at the Auckland District Court in May 2018, and was also ordered to pay $109,000 in reparation costs.
The initial 125 charges were related to misrepresentations made while collecting loans; 83 were misrepresentations with regards to the lender’s right to repossess borrower property, 29 were misrepresentations that they could add further costs after the property had been repossessed and sold, and 10 were misrepresentations about the amount borrowers were required to pay under court attachment orders.
Justice Moore stated that Budget Loans instructions to debt collection agencies were “cynical and extortive,” and said that illegal representations were “a central feature of the companies’ operating business model.”
“There is no comparable case involving such damaging, prolonged, focused, cynical, personal and economic conduct,” Justice Moore said.
“[Budget Loans] are in the business of acquiring distressed loan books and enforcing the loans purchased for profit,” he explained in his judgement. “Having purchased bad debt, the companies business model was to create cash flow by getting debtors to pay as much as possible for as long as possible.”
Many, if not all, of their victims were vulnerable. Their property was unlawfully repossessed and they paid more than they should have.”
The Commerce Commission is seeking management banning orders against Allan Hawkins and Wayne Hawkins, the current and former directors of Budget Loans. It has stated that it will make no further comment on the matter until it has been decided by the Court.