A warning shot for lenders

El Cheapo Cars Limited has been sentenced after pleading guilty to failing to provide key information to borrowers about their loan, reinforcing the Commerce Commission’s ongoing focus on protecting vulnerable consumers and enforcing breaches of the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

Sentencing

The District Court has sentenced El Cheapo Cars - trading as Ezybid Finance - for multiple CCCFA breaches. The Wellington-based motor vehicle trader and finance lender was fined $115,500 and ordered to pay $341,931.46 in compensation to hundreds of affected borrowers.

The sentencing follows El Cheapo’s guilty plea to seven charges under section 103 of the CCCFA relating to failures to provide variation disclosures between June 2015 and November 2021. The Commission’s investigation was initiated in 2021 after a customer complaint.

Disclosure failures by El Cheapo

The Commission’s investigation found El Cheapo failed to provide essential information when modifying existing loans, such as when borrowers increased their loan amounts to cover unexpected costs like new tyres. The business did not give borrowers updated details on repayment terms, interest, or loan duration.^[1] As the Commission highlighted, these obligations are fundamental protections for consumers under the CCCFA.

Judge Noel Sainsbury stressed in sentencing that “disclosure obligations are among the most fundamental protections under the CCCFA”. The Commission welcomed the outcome as a “win for consumers” and a clear signal to motor vehicle financiers: non-compliance with disclosure requirements will not be tolerated.

A pattern emerging: Civil proceedings against Go Car Finance and Second Chance Finance

The El Cheapo case is not an isolated incident in the motor vehicle financing industry. The Commission has also launched civil proceedings in the High Court against other motor vehicle lenders, Go Car Finance and Second Chance Finance, alleging irresponsible lending in breach of the CCCFA.^[2]

In March 2024, the Commission filed proceedings against Go Car Finance for failing to assess whether borrowers could repay loans without substantial hardship.^[3]

In both cases, the Commission is seeking pecuniary penalties, statutory damages, and orders waiving debts for borrowers whose vehicles were repossessed.

Why this matters

These enforcement actions form part of a broader trend. The Commission has made it clear that CCCFA compliance remains a top priority, especially where vulnerable borrowers are involved. Lenders, particularly in the motor vehicle finance sector, should take heed.

In parallel, the Government is reforming the CCCFA. The Credit Contracts and Consumer Finance Amendment Bill passed its first reading on 20 May 2025 and is now before the Select Committee. Read more about the proposed CCCFA reforms and their implications, including the proposed transfer of regulatory responsibility to the Financial Markets Authority, here.

This Bill forms part of a wider financial services reform package introduced in March 2025, including:

• Financial Markets Conduct Amendment Bill
• Financial Service Providers (Registration and Dispute Resolution) Amendment Bill
• Credit Contracts and Consumer Finance Amendment Bill

Read more about the proposed reforms and their implications here.

But for now, the Commission is certainly not taking its foot off the gas when it comes to CCCFA enforcement and lenders can expect compliance failures to be actioned accordingly.

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Please get in touch with one of our experts to discuss any aspects of this article and its potential implications for your business.

Special thanks to Holly Soar for her assistance in preparing this article.