The High Court in Christchurch has ordered Eagle M.A.N Group Limited, a high-cost lender, to pay a $200,000 fine after the Commerce Commission found it was charging borrowers up to 182.5% interest – well above what is legally permitted under the Credit Contracts and Consumer Finance Act (CCCFA).

This is the Commerce Commission’s first case enforcing rules for high-cost lenders.

Commerce Commission Deputy Chair Anne Callinan said that such high interest rates can severely impact vulnerable consumers.

“Loans with interest rates over 50%, and in Eagle MAN’s case over 100%, can push consumers into debt spirals that are difficult to escape, causing harm to both consumers and their families.”

The Commission found that most of Eagle MAN’s loans were issued to people already facing financial strain, recent immigrants, or those on temporary work visas, groups that are often vulnerable to high-cost lenders.

“Eagle MAN should have had compliance processes to ensure these consumers were treated fairly,” Callinan said.

Some loans were found to have annual interest rates of up to 182.5%, in addition to credit and default fees, which left borrowers with debts far exceeding their original loan amounts.

Under the CCCFA, lenders charging over 50% interest must follow strict guidelines, which Eagle MAN did not meet.

The lender issued repeat high-cost loans and failed to disclose important loan details to borrowers.

The High Court concluded that Eagle MAN likely breached the CCCFA across its high-cost loan portfolio from May 2020 to August 2022.

The court’s decision was based on a sample analysis revealing that over half of the loans reviewed breached legal requirements, affecting around 59% of Eagle MAN’s customers.

“This ruling is significant because it demonstrates the systemic nature of these breaches, and the penalty reflects the serious impact on consumers,” Callinan said.

Eagle MAN appeared in the Christchurch High Court on 11 October 2024.