Book up provider in South Australian Indigenous community ordered to pay $167500 for exploitation of consumers
The Australian Securities and Investments Commission (ASIC) stated that the Federal Court has fined Lindsay Gordon Kobelt $167500 for engaging in unconscionable and unlicensed conduct.
Mr Kobelt is the owner and operator of Nobby's Mintabie General Store (Nobby's) in the Anangu Pitjantjatjara Yankunytjatjara Lands (APY Lands) in remote South Australia.
Mr Kobelt provided a form of credit known as 'book up', which allows the customer to buy goods now and pay for them later. Book up is generally an informal arrangement with no set repayment dates or formal documentation. Book up is commonly used in Indigenous communities such as the APY Lands and can play a useful role in certain communities.
However, ASIC was concerned that Nobby's book up practices were exploitative as consumers were required to provide their debit cards, PINs and details of their income to Mr Kobelt, who then used the information and cards to withdraw all or nearly all of the customer's money from their bank account on or around the day they were paid.
On 10 November 2016, the Court found that:
- Mr Kobelt's system of providing book up was unconscionable; and
- Mr Kobelt had engaged in unlicensed credit activity when selling motor vehicles on book up (refer: 16-383MR).
On 13 December 2016, the Court made injunctive orders requiring, amongst other things, that Mr Kobelt return all the debit cards in his possession to officers of ASIC who arranged for the return of these cards to affected customers.
ASIC Deputy Chairman Peter Kell said, "The penalty awarded by the Federal Court should serve as a warning to all those in the credit industry that this kind of exploitation of financially vulnerable consumers has serious consequences."
In handing down the penalty finding, Justice White said: "Mr Kobelt engaged in the conduct over a long period of time and was, when doing so, pursuing his own personal interests. His unconscionable system has been the means by which he has derived considerable financial profit."
The matter is the subject of an appeal lodged by Mr Kobelt in January 2017. A hearing date for the appeal has not yet been confirmed.