Commerce Commission says P2P lender Harmoney pleading guilty to misleading consumers into believing they had been pre-approved for a personal loan

The Commerce Commission says it has filed charges under the Fair Trading Act against peer-to-peer (P2P) lender Harmoney alleging it misled consumers into believing they had been pre-approved for a personal loan. 

The six Fair Trading Act charges Harmoney faces relate to 27 versions of a pre-approval letter sent to over 500,000 New Zealanders, across a range of demographics, between October 2014 and April 2015. Each letter featured a similar message and the same misleading representations, the consumer watchdog says. 

The Commission alleges that the letters misled recipients by representing that they had been pre-approved to borrow money from Harmoney. The letters stated that in order to find out how much money the recipient had been approved for they needed to visit Harmoney’s website. 

“In fact, recipients of the letter had to go through the normal application process of lodging a loan request and passing the approval process. Only at that point would their loan request be presented to potential lenders via Harmoney’s platform,” the Commerce Commission says.

“Harmoney has co-operated with the Commission’s investigation and has indicated that it intends to plead guilty to the charges. As this matter is before the Court the Commission cannot comment further at this time.”

The charges have been filed in the Auckland District Court.  

Pre-selected recipients

For its part Harmoney says the recipients of its marketing material were pre-selected through a credit screening process. Nonetheless Harmoney says it acknowledges the information qualifying the offer wasn’t sufficiently prominent so as to be clear there was still a credit process to go through.

“Once Harmoney was made aware of the issue it took immediate action, stopping the campaign completely and ensuring a more robust process in the sign off of marketing campaigns. Harmoney has co-operated fully from first contact with the Commerce Commission,” Harmoney says.

Second case still on cards

The Commerce Commission says the Fair Trading Act charges are unrelated to its Credit Contracts and Consumer Finance Act (CCCFA) investigation into Harmoney’s P2P lending transaction. The regulator says it intends to provide an update on this investigation shortly.

This investigation is in relation to whether fees charged by P2P lenders are covered by the fees provisions of the CCCFA. Against the backdrop of this Commerce Commission probe, Harmoney quietly made major changes to fees charged to borrowers late last year