Payday lender Twenty Fifty Club fined, director banned

Media release

Issued 28 November 2016
Release No. 55

Payday lender Twenty Fifty Club fined $76K and director banned indefinitely

South Auckland payday lender Twenty Fifty Club Limited and its sole director Gavin Marsich have been fined a total of $76,000 and Mr Marsich has been banned indefinitely from carrying out any further consumer lending.

In addition, Mr Marsich has been ordered to pay $4,400 in compensation to one borrower.

They were sentenced in Manukau District Court after being found guilty in June of committing offences under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the Fair Trading Act 1986 (FTA) and the Commerce Act 1986.

The company and Mr Marsich were each convicted of 16 charges including: charging unreasonable credit and default fees; failing to disclose loan information to borrowers, falsely claiming to be a registered financial services provider and a member of a dispute resolution scheme, and failing to supply information required by the Commission for its investigation.

Judge Moses said in sentencing “Anyone who seeks to gain from the poor and most vulnerable of our society without regard for the laws that protect them cannot expect leniency.”

The Judge also made orders preventing Twenty Fifty from enforcing its “marketing fee”, “marketing koha” or default fees on any existing loans.

Commissioner Anna Rawlings said Mr Marsich’s offending was serious as Twenty Fifty Club’s failure to comply with consumer protection laws caused significant harm to borrowers.

“Twenty Fifty Club provided credit to vulnerable consumers who often required urgent loans and generally could not get credit elsewhere. Its customers were not given the important information they needed about their loans such as their right to cancel their contract or the consequences of not meeting their loan obligations.”

“The way in which the fees were charged made it almost impossible for consumers to compare Twenty Fifty Club's loans with other loans,” she said.

Ms Rawlings said that all lenders have a responsibility to operate fairly and to understand consumer credit law requirements.

“Twenty Fifty Club’s business structure and loan documentation reflected an intentional disregard for compliance with important consumer protections. The Judge’s ban reflects the fact there is no tolerance for this type of behaviour in the industry,” she said.

Background

Twenty Fifty Club did not charge any interest. It charged a fee of 50% of the loan amount as a “marketing fee” or “marketing koha”. The fee and the loan amount were due on the borrowers next pay day or within 7 days. If the borrower did not pay, Twenty Fifty would roll-over the loan and charge another fee of 50% of the outstanding balance. These fees affected at least 82 debtors, over some 234 loans.

Mr Marsich was subject to separate criminal charges brought by the Police in relation to his conduct of Twenty Fifty’s operations. In August 2015 he was found guilty at a trial of possessing an offensive weapon after he showed a potential borrower a meat cleaver while describing the company’s debt collection practices. Mr Marsich was ordered to pay $800 emotional harm to the victim and $130 in court costs.

Click here to see a copy of the Judgment of Judge Moses regarding Twenty Fifty Club and Gavin Marsich from June 2016.

© Scoop Media