The purchase
In August 2013 Bridget purchased goods from a company, The Right Stuff, whose salesman came to her home. The total cost of the goods was $4,144 to be paid by fortnightly payments of $102.
Bridget also signed a direct debit authority, and The Right Stuff made the first $102 direct debit.
Bridget then decided to cancel the contract because she thought she would not be able to pay the fortnightly payments. Bridget cancelled the contract outside the 7 day period when a cancellation fee would not be charged.
Bridget accepted she would not receive back a $45 non-refundable application fee, but thought she would receive back $57 from the original $102 she had paid. Instead, the company took $369 out of Bridget’s bank account for a cancellation fee.
The cancellation fee
Bridget did not think The Right Stuff was able to charge her the $369 cancellation fee and complained to FSCL.
We asked the Right Stuff for a breakdown of the cancellation fee. We also reiterated to The Right Stuff that any cancellation fees passed onto customers needed to reflect the actual costs incurred by The Right Stuff as a result of the customer cancelling.
The Right Stuff said the total cancellation fee was $471.15 which was made up of the $45 application fee, a direct debit set up fee of $10, and a transaction fee of $1.75. The cancellation fee also included an amount of $414.40 being 10% of the total purchase price of the goods, and related to commission The Right Stuff had paid its salesperson, which could not be clawed back.
Could FSCL investigate?
As all the fees had been disclosed on the agreement between The Right Stuff and Bridget, and seemed to reflect The Right Stuff’s actual costs of Bridget cancelling the contract, we decided the complaint was only about the level of the cancellation fee and not about an incorrect application of that fee.
This meant the complaint was not one that we could further investigate and we closed the file.
Lessons to be learned
It can be tempting to purchase goods when someone is selling them at your door. However, you should always take time before signing any documents to:
- consider whether you can really afford the goods
- read the contract to check was fees have to be paid if you decide to cancel the contract, and
- consider whether you are able to pay any other fees, such as cancellation fees, before signing any documents.
