Swamped in a flood of debt
Homeless mums owing $150,000 among those falling prey to high-interest lenders
Three mums struggling under almost $150,000 of debt are among the homeless Auckland families falling prey to loan sharks, marae advocates say. Te Puea Memorial Marae has taken in more than 30 homeless families in the past year to help them find housing and improve their lives.
But turning families’ lives around is much harder when they are under a mountain of debt, marae chairman Hurimoana Dennis says.
He told of three mums, all in their 30s, who had 14 kids between them and 30 debts totalling about $144,000.
More than half the debts were to South Auckland finance firms charging high interest and default payment fees on goods such as cars, fridges and clothes.
“Parents need to take some blame for the decisionmaking,” Dennis said.
“But through our ongoing dealings with homeless wha¯nau here, there is always an element of avoidability.” Dennis believes a credit check would make it plain the families could not afford the goods they were trying to buy and that companies were putting profits over ethical lending.
Commerce and Consumer Affairs Minister Kris Faafoi agrees. He said yesterday that it was becoming clear amendments in 2015 aimed at tightening the Credit Contracts and Consumer Finance Act hadn’t gone far enough. It was time to “finish the job”.
He released a Government discussion paper suggesting capped interest rates and fees and increased penalties for irresponsible lending could be possible measures to crack down on loan sharks.
“I’ve spoken with people who have been given loans that are clearly unaffordable for them, and others who have been lashed with huge penalties and fees,” Faafoi said. “These practices
trap people and wha¯nau in an appalling debt spiral that is very difficult to get out of.”
Porirua resident Lisi Taulapapa was among those at the release of the discussion paper yesterday, telling how she fell victim to mobile trading trucks and their sales pitch of taking goods home now and paying later.
“That truck — it’s like for me I can get it straight away, but you never know [there is] a lot of interest behind getting whatever you want, like those perfumes, clothes,” she said.
Dennis named six lenders and retailers that families at the marae were regularly in debt to, including Greenfield Global, which ran mobile trader KiwiOwn.
The Commerce Commission said it investigated and issued a warning to KiwiOwn late last year and had also received complaints against four of the six companies named by Te Puea.
KiwiOwn did not respond to the Herald by deadline, but a commission spokeswoman said its probe led the firm to refund nearly $110,000 in credit and default fees to customers.
The commission’s warning to KiwiOwn said it was likely the trader had misled customers about their rights and failed to disclose key information about credit contracts.
For families at Te Puea, meanwhile, debt remains a constant problem and “one of the main agitators towards becoming homeless, and in some cases, remaining homeless”.