Commerce Commission Deputy Chair Anne Callinan says it was important to take this case because of the significant harm that can be caused to consumers who take out high-cost loans. It is also important to remind lenders and borrowers that there are extra requirements lenders must meet for high-cost loans.

“Loans that have an interest rate of over 50%, and in Eagle MAN’s case over 100%, can push consumers into debt spirals that are very difficult to get out of and cause a lot of harm to consumers and their families,” Ms Callinan says. 

“The majority of loans Eagle MAN issued were to consumers who were financially strained, recent immigrants, or on temporary work visas – these consumers were likely facing significant need which could have made them more vulnerable to high-cost lenders. 

“Eagle MAN should have had compliance processes in place to make sure that these consumers were treated fairly.

“In some instances, Eagle MAN charged an interest rate of 182.5% per annum, on top of credit and default fees. This could saddle consumers with significant debt that is more than the amount they borrowed.”

Under the CCCFA, lenders that offer loans with an interest rate of more than 50% are categorised as ‘high-cost lenders’ and must meet specific requirements. Eagle MAN did not meet these requirements when it issued loans with interest rates and fees that exceeded the amount of the first loan advance (initial amount of money borrowed) and gave repeat high-cost loans to borrowers. In addition, Eagle MAN failed to disclose key information about the loan to borrowers.

The Christchurch High Court agreed with the Commission that it was likely breaches of the CCCFA occurred across Eagle MAN’s high-cost loan book in the period from May 2020 to August 2022. This decision was made based on a sample of high-cost loans analysed by the Commission, in which over half of the loans disclosed a breach of the CCCFA. 

“This court ruling is significant as it shows these breaches were systemic and the penalty reflects the overarching scope and scale of the high-cost loan breaches – 59% of consumers faced breaches which is unacceptable,” Ms Callinan says.

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