Text loans spark call for tighter laws

A plan to offer loans through text messaging has come under fire. File photo / NZ Herald

A finance company's move to offer loans via text message has sparked calls for tighter laws around loan sharks.

Ferratum New Zealand is offering loans of up to $600 via mobile phone, which it says are hugely beneficial for consumers wanting to make on the spot purchases without having to wait.

However, Labour's consumer affairs spokeswoman Carol Beaumont said the new initiative was another example of loan sharks preying on New Zealanders struggling to make ends meet.

"I am particularly concerned that the use of texting is a way to target young people and those on low incomes," Ms Beaumont said.

"Ferratum suggests its service allows lenders to meet urgent needs such as grocery bills. This reveals today's stark reality. Families are lending to feed their families. They cannot combat the rising cost of living alone."

Ms Beaumont called on the Government to legislate to combat irresponsible lending and protect vulnerable people.

"We don't need more evidence of the harm loan sharks inflict on our communities, National's lax approach adds fuel to the fire and it will be families who get burnt."

- NZPA