Lending service fined for ‘approvals’

Online lending service Harmoney has been fined $292,500 in the Auckland District Court for misleading consumers into believing they had been pre-approved for a personal loan.

Harmoney operates a website that lets people directly lend money to other people who have requested personal loans, providing an alternative to traditional bank lending.

Trade Me and Heartland Bank are both minority shareholders in the venture.

The Commerce Commission filed six charges against Harmoney under the Fair Trading Act relating to 27 versions of a preapproval letter sent to more than 500,000 people between October 2014 and April 2015.

Recipients of the letter were asked to go to Harmoney’s website to find out how much money they had been approved to borrow. In reality they would need to go through the normal process of filing a loan application and passing the approval process.

Commissioner Anna Rawlings said businesses need to be careful about representations included in marketing materials to ensure consumers were not being misled in any way.

‘‘Harmoney’s marketing campaign was personalised to individual consumers and gave the direct impression they had been preapproved for a personal loan,’’ Rawlings said.

‘‘Our concern with this practice was that it relied on misrepresentations to draw consumers into a sales process, giving Harmoney an advantage in the market it would not have otherwise have had.’’