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A loan taken out from In The Black Finance Limited is suddenly ‘in the red’

Threatened repossession action

Isaac used the services of Steve, a finance broker, in around May 2013. Steve assisted Isaac in taking out a loan through In The Black Finance Limited (In The Black), for $12,000, secured by Isaac’s Toyota vehicle. In November 2014, In The Black contacted Isaac and told him he was in arrears and needed to make additional payments otherwise repossession action would be taken.


The top up

Isaac was confused because he had made all required payments towards his loan. After contacting In The Black, Isaac discovered his loan had been ‘topped up’ by $2,200 in August 2014, without his knowledge. It appeared the loan had been topped up by Steve and Steve had pocketed the money. Isaac approached the Police who referred him back to In The Black.  Isaac was unable to resolve the issue with In The Black, and he contacted FSCL. We discovered Steve was no longer registered as a financial service provider in New Zealand, so we could not investigate Steve’s actions.


What did Isaac want In The Black to do?

Isaac wanted In The Black to:

a)                  desist from taking any repossession action

b)                  refund the additional borrowed funds and any associated fees and interest applied to his loan account, and

c)                  investigate how his loan was topped up without his knowledge.


Isaac also said:

a)                  It was not his signature on the agreement to borrow the further funds.

b)                  Steve had asked In The Black to pay the loan top-up amount to him personally (not to Isaac), by cheque. Isaac thought this should have raised a ‘red flag’ for In The Black.

c)                  A simple courtesy call to Isaac would have revealed he knew nothing about the loan top up.


In The Black’s version of events

In The Black said that it paid Steve the funds directly, because Steve had said Isaac wanted a loan to buy a Nissan car that Steve owned. In The Black also paid $390 to another lender in relation to an outstanding loan secured by the Nissan car.

We asked In The Black to outline the process it went through to verify the identity of the person taking out the additional loan. In The Black said that the loan top-up documents appeared to have been signed by Isaac and had been presented by Steve. In The Black knew Steve had been Isaac’s finance broker for some time. In The Black had no reason to suspect that the top-up documents had not been signed by Isaac, and it relied on Steve’s integrity.

In The Black also said a search had shown that Nissan vehicle was registered in Steve’s name.


In The Black’s actions to try and resolve the complaint

After we started our investigation, In The Black met with the broker, Steve, and asked him about the precise details surrounding the loan top up. In The Black said Steve was evasive and vague in answering questions. When In The Black asked Steve whether he forged Isaac’s signature, Steve said he had not. However, Steve also told In The Black that he did not think Isaac would let the matter rest and so was prepared to take over the payments for the loan top up. Lastly, Steve said the Nissan vehicle was in his possession.

After considering all of the information, and Steve’s demeanour when it met with him, In The Black thought it was possible Steve had acted inappropriately in arranging the top up loan for Isaac.

In The Black said Isaac’s loan account would be put back in the position it was in before the August 2014 loan top-up was made. It would also repossess the Nissan vehicle from Steve and sell it to recoup some of In The Black’s losses.


Isaac’s complaint is not resolved

Isaac was still not satisfied and said that In The Black:

a)                  Had not done enough to ensure Steve was acting appropriately in his capacity as an accredited broker for In The Black.

b)                  Had not verified the signatures on the loan documentation.

c)                  Should have said there was a conflict of interest when it was asked to credit funds directly to Steve.

d)                  Had not ‘heard’ his complaint because it had initially said that the issue was between him and Steve and had not provided him with FSCL’s contact details.


Isaac said that the fraud had occurred because of In The Black’s negligence. In The Black’s actions and threats of repossession had caused him sleepless nights and unnecessary stress.


In The Black’s response

In The Black said:

a)                  Steve was not its accredited broker, rather he was Isaac’s agent.

b)                  It had no reason to suspect that the transaction may be fraudulent.

c)                  It had no solid proof that Steve had committed fraud and had not reported the matter to the Police.

d)                  It had never received a written complaint from Isaac until FSCL contacted it on 14 November 2014.


In The Black also pointed to information in its disclosure documents provided to Isaac, about how to complain. In The Black said that Isaac’s account had been fully restored and he had not suffered a financial loss.


FSCL attempts to resolve the complaint

Our case manager spoke to In The Black and pointed out that Isaac had said the situation had caused him stress and inconvenience and asked whether it would be prepared to make a payment to Isaac to compensate for this. In The Black agreed to make a payment of $250.

We emailed In The Black’s offer to Isaac and also told Isaac that we do not have the power to conduct a global investigation of In The Black’s processes, only individual complaints. 

Isaac did not reply and we closed our file.