Two companies within the Superloans group have been warned by the Commerce Commission after an investigation following a number of complaints from consumers and budget advisors.
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The Commission found Superloans Napier and Superloans Porirua provided consumers with high-cost loans on an ongoing basis.
Commission chair Anna Rawlings said in one case a borrower had 19 loans within a year.
"Our investigation found Superloans promoted and allowed its loans to be used on a regular and long-term basis and encouraged longer term and regular borrowing through the use of text and email messaging to borrowers.
"These text messages did not contain a risk warning."
The Credit Contracts and Consumer Finance Act (CCCFA) requires lenders, before entering into an agreement, to make reasonable inquiries with a borrower so as to be satisfied that the agreement meets the borrower's requirements and objectives, and to exercise the care, diligence and skill of a responsible lender.
Rawlings said the two companies were likely to have breached the CCCFA.
"There was also limited evidence to indicate a borrowers' previous borrowing or stated purpose for the loan was discussed or taken into account when assessing the suitability of the loan, and Superloans Groups' guidelines did not contain any guidance on how staff should comply with their responsibilities in this area."