Payday lender Nimble is refunding $1.5 million to more than 7,000 customers after being hit by corporate regulator for failing to meet lending standards.
Nimble hands out loans of between $100 and $5000 via online applications, and its marketing campaign featuring a man dressed in a rabbit outfit promises loans within an hour.
A crackdown by the Australian Securities and Investments Commission on irresponsible lending uncovered several shortcomings in Nimble's lending practices.
They included not properly assessing consumers' financial circumstances, failing to recognise applicants that had received multiple loans from other lenders, and failing to make proper inquiries about consumers' reasons for seeking a loan.
Nimble has agreed to repay more than $1.5 million to more than 7,000 customers, give $50,000 to Financial Counselling Australia and bring in a compliance consultant to review its practices.
"This is a significant outcome for financially vulnerable consumers," ASIC deputy chair Peter Kell said.
"This remains a high priority area for ASIC and we expect the industry to continue to lift its game."
Nimble chief executive Sami Malia said the loans highlighted by ASIC made up only 1.2 per cent of all loans made between July 2013 and July 2015.
The issues identified by ASIC's investigation were "entirely unintended", he said.
"Nimble is always striving to have the best credit assessment systems and has made a significant investment in its application assessment processes," Mr Malia said.
ASIC acknowledged Nimble has made significant changes to its lending processes since its investigation.
The company has criticised the laws governing small lenders, saying they fail to cater to companies now operating online.
"The regulations have been drawn up with a traditional shopfront model in mind and are not fit for the new suite of fintech companies innovating in Australia," a Nimble spokesperson told AAP.
"At the moment, the legislation calls for 'reasonable inquiries' (into consumers' financial situation) and gives only some guidance."
Nimble wants a series of checks added to small amount credit contract laws, such as a client's income, discretionary spending and repayment history.
It submitted this list to the recent government report into payday lenders.
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