Local finance company El Cheapo Cars, trading as Ezybid Finance, has been ordered to pay nearly $457,000 in fines and damages for failing to provide written disclosures of loan changes to hundreds of borrowers over a six-year period.
The Wellington District Court ruled that El Cheapo must pay $341,931.46 in statutory damages and a $115,000 fine after pleading guilty to seven charges under the Credit Contracts and Consumer Finance Act. The charges covered the period from June 2015 to November 2021.
Judge Noel Sainsbury said the company failed to give borrowers legally required written variation disclosure statements, which detail critical information such as payment amounts, interest rates, and total debt owed. The lack of transparency meant borrowers were often unaware of the full implications of changes to their contracts.
While the court accepted the offending was not deliberate but rather due to negligence, the judge stressed the importance of written disclosures for consumer protection. El Cheapo had relied on an inadequate accounting system and did not meet its compliance obligations, the court heard.
The Commerce Commission, which brought the case, said the damages would be distributed to affected borrowers or offset against outstanding or written-off debts. The agency reviewed 13 sample cases during its investigation, finding that none had received proper documentation.
El Cheapo has since changed its practices and begun winding down its car sales and lending operations.