Watchdog ASIC is investigating a payday lender accused of lending to drug addicts, gamblers and illiterate people, as well as changing the terms of loan contracts after they are signed.
All four corners of the ABC discovered disturbing conduct by online lender Good2Go Loans, triggering an investigation by the Australian Securities and Investments Commission.
An insider has revealed numerous cases of irresponsible lending by the company, including lending to one person affected by drugs and another who could barely read or write.
“Someone would come in and you would know they were visibly affected by the drugs,” the whistleblower said.
“I was told, ‘Never mind my mate. This loan is piling up. Write the loan down.’
“I’ve had someone with several payday loans from other lenders and clearly they have a gambling problem – they have all of these online gambling payments on their bank statements. They got the loan. “
Four Corners has seen evidence that Good2Go Loans changes contract terms, allowing it to bypass statutory caps on fees and charges.
After Good2Go Loans customers agree to a two-year repayment agreement, the company sends a text message with new terms, including increased repayment that shortens the loan term.
The tactic allows Good2Go to avoid a 20 percent cap on loan establishment fees set out in federal law.
A Good2Go loan, seen by Four Corners, included a “setup fee” of $ 250 on a $ 500 loan.
“The loan agreement will say the loan is for 104 weeks, but 99% of the time that doesn’t happen,” a whistleblower said.
“So once they’ve emailed back to say ‘I accept’, we change it. We send them an SMS indicating the new repayment amount of their loan.
“They’re cheated. They might have signed a contract saying they’ll pay back, say, $ 7 or $ 10 a fortnight, but then that changed and they pay off, say, $ 72 a fortnight.
“They weren’t expecting that kind of refund, so they might miss payments, the payments might bounce back, and then come a whole range of denial fees.”
“Rigged figures of candidates, adjusted budgets”
Payday lenders are prohibited by law from extending credit to customers who cannot afford it or whose repayments would cause significant hardship.
But the Good2Go Loans insider told Four Corners: “Basically the numbers are rigged. Budgets are ‘adjusted’.”
“The customer can tell you that they spend $ 40 a week on cigarettes; you deposit $ 10. You deposit $ 5 for clothes so he can buy a t-shirt. [then] they won’t go without clothes. We have been told that as long as there is an allowance in there, it is fine.
“The managers will do their best to adapt the budget.
“There would be times when you just couldn’t, but nine out of 10 times it would work.”
The insider said the attitude of the company’s management towards customers was “utter contempt.”
“[Management thinks] ‘F *** les, no luck, just do what you gotta do, they’re just fucking Centrelink people, it doesn’t matter’ you know? “They are bludgers,” “said the insider.
Good2Go Loans did not respond to questions from Four Corners.
Watch Four Corners: Game of Loans tonight at 8:30 p.m. on ABC TV.
corporate-fraud-and-crime, law-crime-and-justice, ethics, consumer-finance, australia