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Outback shop faces massive fine for ‘book up’ credit scheme

Nobby’s is one of only three stores in Mintabie, 980km NW of Adelaide. Image: flickr/Dietmar Down Under

An outback general store owner who was alleged to have financially exploited his customers with a credit scheme has been fined $167500 for engaging in unconscionable and unlicensed conduct.

The Australian Securities and Investments Commission (ASIC) reported that the owner of Nobby’s Mintabie General Store had provided a form of credit, commonly used in indigenous communities, called ‘book up’.

Defined as an informal arrangement with no set repayment dates or formal documentation, book up enables customers to purchase goods and pay off their tab at a later time.

Store owner Lindsay Kobelt came to the attention of ASIC over concerns that he required book up customers to provide debit cards, PINs and income details, which he would use to withdraw most or all of customers’ funds on pay days.

Last year the Federal Court found that Mr Lindsay’s conduct in running the book up operation was unconscionable, that he had also engaged in unlicensed activity by selling vehicles on the book up system, and forced him to return all debit cards in his possession to ASIC for return to affected customers.

It was reported that Mr Kobelt withdrew $984,000 from 85 customers between July 2010 and November 2012, and charged a fee for the service, however the Australian reported that he denied charging fees and said that the system helped put food on people’s tables.

A statement from ASIC to the court said: “On one particular day, Mr Kobelt withdrew $56,944 from some of his customers’ accounts, despite having no authority to do so … due to a bank glitch which allowed withdrawals despite insufficient funds being available”.

The court passed down the fine on April 13, 2017, with Federal Court Judge Richard White stating that he would reduce the penalty from $230,000.

“There is the prospect that the penalties outlined above will have a crushing effect, taking into account his financial situation,” Justice White said.

It is understood that payment of the fine would be dependent on an appeal lodged by Mr Kobelt against the Court’s finding of misconduct.

ASIC Deputy Chairman Peter Kell said investigations into book up providers would be ongoing.

“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,” he said.

“ASIC is continuing to work with book up providers and Indigenous communities to ensure that all consumers are treated fairly.

“Behaviour that is unscrupulous or illegal will not be tolerated.”

Nobby’s Mintabie General Store is located in the remote Anangu Pitjantjatjara Yankunytjatjara Lands (APY Lands) in South Australia, 980 km northwest of Adelaide.

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