16 Apr 2024

Pawnbrokers under spotlight for helping 'desperate for money' Pasifika people

3:00 pm on 16 April 2024

Traditional Tongan fine mats and tapa or ngatu made by Mina Halatanu Photo:

Pasifika families in New Zealand are increasingly falling victim to loan sharks and unscrupulous pawn loan agreements, with invaluable traditional items such as tapa mats being lost, community workers say.

Tapa mats are a lucrative commodity in Polynesia with some valued in the thousands of dollars.

Many, however, are not for sale and only exchanged as tributes in funerals, weddings or birthdays.

They are looked upon as a sort of cultural sacrament passed on from generation to generation.

But now there are reports of Pasifika families losing these items to pawnbrokers as they lend their assets in order to support their budgets.

"Financially, people are struggling," an Auckland-based Justice of the Peace and Tongan community leader, Salaote Lilo, said.

"People are desperate for money and can't keep up with the high cost of living, so they will go for these pawn loans because they need the money," she added.

Cultural items were typically lost after financially insecure clients agreed to unrealistic repayment plans, Lilo said.

It was a clear case of vulnerable people being taken advantage of, she said.

"They are bound to use these tapa clothes because they're in high value and they use it as security," Lilo said.

"These loan sharks use it as an opportunity to scam them… sell it with less cost," she said.

And it is not just Auckland that is experiencing this problem.

Hamilton-based financial helpline advisor Theresa Alaimoana said she had dealt with a number of Pasifika families who had had tapa mats lost to unscrupulous pawnbrokers.

Alaimoana said the problem was likely bigger than it appeared as many families did not come forward for help.

"It is irresponsible lending from the pawnbrokers who think they are doing a service by giving people a quicker alternative to bank loans," Alaimoana said.

"People will be in a desperate situation where they need money quickly so they turn to a pawnbroker because that is the easiest way to get money.

"One of the families I worked with, they were given six weeks to pay it off with a interest rate of 20 percent, so they had a very small period to pay off this loan at a very high interest rate."

Pawn loans like these are not illegal if transacted by registered brokers.

It is an issue that is currently being evaluated at by the High Court in New Zealand after New Zealand's Commerce Commission filed proceedings.

A pawnbroker, according to New Zealand's Secondhand Dealers and Pawnbrokers Act, "means a person, who, in expectation of profit, gain, or reward, lends money on the security of goods of which the person takes possession, but not ownership" and "who is not a secondhand dealer or the employee of a secondhand dealer and pawnbroker".

Commerce Commission

Photo: RNZ / Alexander Robertson

In a written statement, New Zealand's Commerce Commission told RNZ Pacific that it was waiting for a judgement to be made.

"As consumers borrow money under a pawnbroking contract, to what extent they are covered by the Credit Contracts and Consumer Finance Act 2003 (CCCF Act) is currently being determined by the Courts," it said.

"The Commission is waiting on a judgment on proceedings we filed asking the High Court questions about how the CCCF Act applies to pawnbroking contracts; currently, the pawnbroking industry holds the view that their contracts are not covered by the CCCF Act in any respect."

'Ethical and responsible'

As of January 2024, there are 45 registered pawn loan shops in New Zealand.

Worldwide, pawn shops endure a stigma of shady deals and stolen goods.

Cash Converters is a pawn company which promotes itself as a clean business.

"Cash Converters has, for more than 25 years, provided ethical and responsible solutions for New Zealand consumers who require access to short term financial assistance," Cash Converters said in a statement.

"Cash Converters very deliberately does not buy, pawn or sell culturally significant items including Pounamu, tapa and similar cloths from the Pacific islands and carvings made from greenstone, bone, Paua shell and Kauri wood."