Craig had been the customer of a mobile trader since at least February 2018. In July 2018 Craig bought a television from the mobile trader for $2,999. Including the establishment and delivery fees, Craig agreed to pay the mobile trader $3,174 and started repaying this debt at $40 a week.
In May 2019 Craig bought a smart phone from the same mobile trader for $3,999. The existing balance of $530 was refinanced into the new loan and, with the establishment and delivery fees, his loan balance increased to $4,704. Craig continued to repay the loan at $40 a week.
In July 2022 Craig contacted a Community Law Centre saying he had never received the phone that he purchased in 2019 and wanted the mobile trader to refund all his money. When the mobile trader did not agree, Craig, with the help of his community lawyer, complained to FSCL.
Dispute
In addition to Craig’s complaint that he had not received the phone, Craig’s community lawyer raised concerns about the decision to lend. The community lawyer also identified that Craig appeared to have overpaid the mobile trader by $1,300 because the mobile trader had not stopped the direct debit instruction when Craig had finished paying for the phone.
The mobile trader provided records from the courier showing that the phone had been delivered. The mobile trader also said they did a ‘surface level’ assessment of Craig’s ability to repay the loan and were satisfied they met their responsible lending obligations. The mobile trader offered to refund Craig’s overpayment to finally resolve the complaint.
Review
We could not see that the mobile trader had any reason to hold onto the overpayment and asked the mobile trader to refund the $1,300 while we continued to investigate the complaint. The mobile trader agreed.
We asked the mobile trader to give us their full lending file, including the affordability assessment showing that Craig could afford to repay the loan. The mobile trader’s file was incomplete and there was no affordability assessment.
Craig’s bank statements showed multiple payments to mobile traders and that Craig’s income was insufficient to meet these payments and Craig’s living costs. At one point it appeared the mobile trader had duplicated payments. The payments to the mobile trader were frequently dishonoured and when they were paid, other payments were dishonoured. We were satisfied that the mobile trader had not met their obligations under section 9C(3) of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to satisfy themselves that Craig could afford to repay the loan without suffering substantial hardship.
Although the remedy for a breach of section 9C(3) of the CCCFA did not come into force until 20 December 2019, section 89(1)(aaa) codified the remedy that we had been applying since section 9C of the CCCFA came into force on 6 June 2015. We said that the lender was obliged to refund all the interest and fees paid over the life of the loan. Based on the information available, this amounted to $580.
We could see from Craig’s bank statements that the mobile trader’s payments had cost him $250 in bank dishonour fees. We said that the mobile trader should compensate Craig for this cost.
On balance, it was our view that the phone had been delivered to Craig. The mobile trader provided some information showing that the phone had been delivered to Craig’s address but not a signed receipt. In addition, if the phone was not delivered, we could not understand why Craig would have paid for the phone for three years before complaining that it had not been delivered.
However, it was our view that the delivery charge of $100 was excessive and we said the mobile trader should refund $80.
Although we were pleased to see that the mobile trader had refunded the overpayment when we asked, the failure to cancel the direct debit instruction had caused Craig stress and inconvenience and compensation of $250 was appropriate for this.
Resolution
The mobile trader and Craig accepted our decision, and the mobile trader paid Craig $1,160 in compensation.
Insights for participants
Mobile traders must have systems in place to ensure they comply with their legal obligations. It was concerning to see the lack of information gathered by this mobile trader to assist them in assessing whether the credit was affordable for Craig and that the direct debit continued well after the item had been paid for.
