A Queensland used car salesman could be fined more than a million dollars for offering high-interest loans to Indigenous people who couldn't afford to pay them.
Used car business Supercheap in Cairns advertised car finance with a 20-minute on-site approval to people on Centrelink benefits, former bankrupts, defaulters and those with a bad credit history.
Loans with an interest rate of 48 per cent per annum were then provided by the associated Cash Brokers and lender Channic.
The cars also had numerous problems including peeling paint, cracked windscreens, a broken front passenger door, overheating radiators, locked-up steering, broken air-conditioning, and missing or flat spare tyres.
The Brisbane Federal Court on Friday found the companies and their director Colin William Hulbert, who was also the operator of Supercheap, breached their responsible lending obligations by writing the unsuitable loans.
Justice Andrew Greenwood agreed with ASIC, who brought the action against Mr Hulbert, that the contracts were unjust and Channic engaged in unconscionable conduct.
The companies and Mr Hulbert denied their business activities were likely to attract people who were unable to get a loan from a major banking institution, understand the contract before them or evaluate whether the loan was fair.
The court is now open to impose a penalty of up to $1.1 million against the companies and up to $220,000 against Mr Hulbert for each breach.
Yarrabah is the most disadvantaged local government area in Australia, according to the 2011 Census.