infonews.co.nz
INDEX
FINANCE

Blenheim car dealer to refund customers over loans

Thursday 2 August 2007, 8:36AM

By Commerce Commission

923 views

BLENHEIM

In a settlement reached with the Commerce Commission, Blenheim car dealer The Motor Centre will refund 37 customers a total of $1,039 after it failed to give them the right information when they borrowed money to buy cars.

The Motor Centre admits it breached the Credit Contracts and Consumer Finance Act when it failed to tell customers about their rights and obligations, and charged fees for services it did not perform.

The Motor Centre charged fees between $3.00 and $35.00 to check the Personal Properties Security Register, but it never undertook the checks and simply kept the money.

Graham Gill, Fair Trading Manager, Auckland, said that lenders can only impose charges for services that they actually deliver.

"It should be obvious that companies cannot charge fees for services that they do not provide."

The company also admitted breaching the Fair Trading Act by misleading customers about who the loan was from. It used loan application forms from a reputable credit provider and a number of customers were misled into believed that the loans were with that company.

"The law is very clear about what borrowers should be told when they take out a loan," says Mr Gill.

"This includes the basic information of which company it is that is lending them the money."


Background
Disclosure of information By not disclosing all the information required in their credit contracts, TMC breached section 17 of the CCCF Act. The information that they didn't disclose included
• who the creditor was
• what the annual interest rate was
• how interest would be calculated and debited
• what would happen if the loan was paid in full
• information about the right to cancel the contract

Forms By using another company's forms, TMC breached section 32 of the CCCF Act, as well as section 13 (b) of the Fair Trading Act, as people were misled into believing that the credit provider was another company rather than TMC.

Unreasonable fee By charging a fee for a service that they did not carry out, TMC breached section 41 of the CCCF Act

Personal Property Securities Register PPSR is a form of electronic 'notice board' recording specific details of security interests held in respect of personal property. Information about a security interest registered in the PPSR is referred to as a Financing Statement. Subject to privacy restrictions set out in the Personal Property Securities Act, people can search for and view information held in financing statements in the PPSR by debtor name or by specific collateral details such as vehicle registration, VIN and chassis numbers. The register can be accessesd at www.ppsr.govt.nz

CCCF Act Credit Contracts and Consumer Finance Act - A general guide for the credit industry can be downloaded from the Commerce Commission's website at www.comcom.govt.nz