Online payday lender Moola will refund approximately $2.8 million to current and former borrowers following a Commerce Commission investigation into credit and default fees.
Moola agreed to a settlement with the Commission, acknowledging the watchdog's view that it had charged unreasonable credit and default fees between February 2016 and July 2017.
The Commission found that during the period of its investigation that Moola charged:
• Default fees of $60 where the reasonable fee as calculated by the Commission was from $10.24 to $15.66 (depending on when the fee was charged).
• Establishment fees of $150 or $350 depending on the term of the loan, where the reasonable fee as calculated by the Commission was either $4.47 or $5.48 (depending on when the fee was charged).
• Processing fees of $50 where the reasonable fee as calculated by the Commission was either $10.86 or $12.25 (depending on when the fee was charged).
Commission Chair Anna Rawlings said fees must recover costs that are relevant and closely connected to the activity for which the fee is charged.
"We consider that during the relevant period, Moola's default fee, establishment fee and processing fee recovered costs that were not closely related to the matter for which the fees were being charged, as required by the CCCFA.
"Moola acknowledges our view and has undertaken to credit or refund affected customers the difference between the fee charged and the fee we calculated was a reasonable fee."
Moola co-operated with the Commission's investigation and reduced its fees prior to and again during the investigation.
The Commission allowed Moola six months to calculate the refunds it owed to customers before the public was notified of the settlement.
"Moola agreed to identify affected customers and calculate the difference between the amount charged and the reasonable amount calculated by the Commission, which it has now done," Rawlings said.
Affected customers can expect to be credited or refunded by Moola within the next 12 months.
Anyone who had a loan with Moola between February 2016 and July 2017 can check the website for more information.
Moola offers loans of between $500 and $5000. Prior to the introduction of a daily rate of charge cap in June 2020, it offered loans with interest rates as high as 620.5 per cent per annum.