KEY POINTS:
Kiwi finance companies are being accused of resorting to underhanded and unethical tactics by offering cash to clients who successfully refer their mates for a loan.
The Herald on Sunday has also learned of a company attempting to sign up restaurant patrons for loans as they dined on
Auckland's Ponsonby Road, offering to pay the dinner bill if the punter applied for a loan then and there.
Chief executive officer of Mangere Budgeting and Family Support Services, Darryl Evans, said finance companies were specifically targeting young people, by making high-interest cash loans look attractive and easily attainable. "In Manukau City especially, it's just rife. It's just not right - it amounts to luring them."
He pointed to an ad in this week's Manukau Courier, placed by lenders Instant Finance. With the bold title "$50 cash for you - a great loan for your mate" it encouraged existing IF borrowers to sign up their friends and family in order to pocket a direct financial reward.
The "mate to mate" deal is said in the ad to "do your mates a favour".
Evans said the ads had been popping up almost every week, from a variety of loan companies offering up to $150 for "friend" referrals.
"If people need money they should have to go out and find it, it should not be finding them like this."
He said for many people, these types of ads were "hard to resist".
Evans said he was in the process of complaining to the Advertising Standards Authority about the mate to mate advertisements.
The chief executive of Instant Finance denied any wrongdoing. "I'm not aware of anything sinister about it," Richard de Lautour said.
He acknowledged there were companies operating in the same neighbourhood who were less than reputable. But he said IF was "a recognised brand" which had been around 35 years, and was dedicated to helping people out of tight financial situations. The company did not lend money to poor people "looking to buy big screen TVs" and would never lend money to someone when they thought it would be difficult for them to pay it back.
"It's not our style to put people under pressure. We provide a lifeline, to enable people to survive life's unexpected hiccups. There are people out there who struggle."
A special service offered by the company was discounted flights to the Pacific Islands in the event of an unexpected death, that could be charged to a loan.
IF provided small loans - "albeit at a relatively high interest rate" - for up to $8000 or $9000. A spokeswoman for the Advertising Standards Authority said no complaints about the ads had yet been processed.
The Commerce Commission said the ads did not breach the Fair Trading Act.
