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13-284MR Small amount lender pays infringement notice penalty for 'Free' loan offer
Ferratum Australia Pty Ltd (Ferratum), an online, small amount lender, has paid an infringement notice penalty of $10,200 to ASIC for false or misleading advertising.
The infringement notice was issued following an investigation by ASIC which found that Ferratum advertised a 'free $100 loan' on its website at www.cashinahurry.com.au, in television advertisements, on automatic teller machine screens and in Google text and display advertisements, between 24 May 2013 and 31 July 2013 (the free loan promotion).
ASIC had reasonable grounds to believe the free loan promotion was misleading as transaction fees applied to the first $100 of the loan.
Ferratum has refunded all transaction fees paid by clients who took out a loan of $100 during the free loan promotion.
ASIC Deputy Chairman Peter Kell said, ‘Advertisements that draw consumers in by using terms like 'free' should not have set up or transaction fees hidden in the fine print’.
The payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.
Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234) states the word 'free' conveys a strong impression and should not be used where there is any charge to use the product.