ASIC has announced that PAID International Ltd (PAID) (formerly First Stop Money Ltd) will refund $1,128,142 to customers who were charged an excessive fee after taking out loans of up to $5,000, including small amount loans.

The refunds will be made as part of an enforceable undertaking (EU) accepted by ASIC to 6,650 consumers in relation to 20,273 loans.

An ASIC investigation found that between 1 July 2011 and 30 June 2013, PAID:

• unlawfully charged its customers in New South Wales and the Australian Capital Territory a fee of up to $59.50 to pay the loan money into their bank accounts by electronic funds transfer (EFT) (instead of by cheque), and
• had failed to comply with its general conduct, responsible lending, advertising and disclosure obligations.

The EFT fee was added to the loan amount as an additional amount repayable by consumers, and it significantly exceeded the actual fees that PAID incurred in arranging an EFT transfer.

ASIC was also concerned that:

• charging the EFT fee contravened NSW and ACT legislation which imposed a limit on the total fees and charges allowable under consumer credit contracts
• PAID engaged in misleading or deceptive conduct
• breached its responsible lending obligations
• displayed incorrectly calculated comparison rates on its websites (First Stop Money, Cash Train, Loans Pronto, Payday2day)
• disclosed incorrect fees and charges in its credit contracts.

ASIC has accepted an EU which requires PAID to:

• refund the EFT fee charged to consumers by 31 March 2015
• pay, by 10 April 2015, the balance of any money unable to be refunded to consumers to Financial Counselling Australia for the purpose of funding financial literacy programs and research in Australia, and
• engage an independent compliance consultant to audit the refund process and PAID’s compliance obligations and advertising practices.