ASIC has commenced civil penalty proceedings in the Federal Court against Ferratum Australia Pty Ltd (Ferratum) for charging prohibited fees and overcharging consumers who paid off loans early.
ASIC alleges that between March 2019 and August 2021, Ferratum breached consumer credit protection laws in relation to small amount credit contracts by:
- charging borrowers prohibited fees such as direct debit fees when using certain credit cards and fees to alter direct debit arrangements
- entering into contracts with borrowers which imposed prohibited fees
- incorrectly calculating the amounts borrowers had to pay when they repaid their contracts early, leading borrowers to pay more than they had to, and
- failing to act efficiently, honestly and fairly by ensuring it had an accurate and reliable system to calculate, record and monitor the amounts required to pay out contracts early.
ASIC Deputy Chair Sarah Court said, ‘The credit protection laws are designed to protect consumers who need to access small amount loans. ASIC is concerned that the alleged conduct harmed consumers with low incomes and low bank account balances. These types of practices are especially harmful during the COVID-19 pandemic’.
ASIC is seeking civil penalties, declarations and other orders.
The proceeding will be listed for directions on a date to be determined by the Court.
