Lenders deny predatory practices

Marae names companies it says are helping saddle low-income South Auckland families with staggering debt

Seven companies have been named by marae advocates for allegedly helping to lump low-income South Auckland families with hundreds of thousands of dollars of debt.

Te Puea Memorial Marae chairman Hurimoana Dennis named the South Auckland lenders and retail outlets as those most commonly owed money by homeless families going to the marae for help.

They include KiwiOwn, Cash Converters, UBuy, Red Rat Clothing, G-Mana/Kiwi Auto Finance, Fair Value and Lelei Finance. The companies denied any wrongdoing, saying they lend and sell responsibly.

But Dennis said debt was a problem with each of the 30 homeless families that Te Puea had helped in the past year.

Some — such as three Te Puea mums who had 14 children between them and 30 debts totalling almost $150,000 — were struggling with loans they might never be able to pay back.

Dennis questioned how families were given access to new loans when in debt and sometimes having no income other than a benefit.

“Parents need to take some blame for the decision-making,” he said. “But through our ongoing dealings with homeless wha¯nau here, there is always an element of avoidability.”

His decision to speak out comes as the Government attempts to crack down on the sector.

Commerce and Consumer Affairs Minister Kris Faafoi said people were being given loans they couldn’t afford and lashed with huge penalties and fees that sent them into a “debt spiral that is very difficult to get out of”.

A discussion paper released last week suggested laws could be tightened by measures such as possibly capping the maximum interest rates and fees lenders could charge.

Mobile trucks selling door-to-door have already been hit by a recent Commerce Commission crackdown that led to $1.56 million in fines and Hurimoana Dennis (inset)

refund orders issued.

One commission investigation into Greenfield Global, trading as KiwiOwn, led the company to late last year refund nearly $110,000 in credit and default fees to customers. KiwiOwn likely misled customers and failed to disclose key facts about credit contracts, the commission said. Selling iPads, laptops, Xbox consoles and mowers on instalment plans, it was popular with families at Te Puea now in debt to the company.

Another company popular with Te Puea families — the urban streetwear chain Red Rat Clothing — has been the subject of five complaints to the commission since 2012. Red Rat shoppers can walk out with hip-hop and urban streetwear clothes without paying up front when approved for an instalment payment plan.

But in May this year, the commission asked the company, with Auckland outlets in Papakura, Manukau, Mangere and Henderson, to provide information on “their responsible lending obligations”.

Chief executive Richard Wright said Red Rat was contacted by the commission once and had since clarified its assessment process, despite already being compliant. Families on low incomes or benefits often wanted to spread out the cost of purchases, he said. However, they had to prove they lived at a residential address and undergo a credit check.

Red Rat also inquired about income, food and living expenses, with those who were homeless, in significant debt or who might be put into “substantial hardship” refused credit.

Many, many small operators are slipping through the cracks.

The commission said it had also received complaints against Cash Converters and the G-Mana/Kiwi Auto Finance Otahuhu dealership. However, it did not provide details about the complaints or whether they were connected with the Credit Contracts and Consumer Finance Act, governing lending laws.

A Cash Converters spokeswoman said it had spoken to the commission, was not aware of any current complaint, and had never had a complaint needing formal dispute resolution.

G-Mana said it was also unaware of any complaint and had been in business for more than a decade without any major complaints.

Both companies said they carefully screened those seeking credit.

Licensed pawnbroker Lelei Finance managing director Ilaiasi Lelei also replied to Herald questions to deny irresponsible lending.

Dennis, meanwhile, wants to see the law strengthened, saying “many, many small rogue operators are slipping through the cracks”.