The television purchase
In March 2013, Miriam purchased a television from a door-to-door salesperson working for Doorstep Limited. Miriam thought the salesman told her that she would need to pay $40 per week for 8 months to pay off the television. Miriam did not read the sale agreement before she signed it.
Later, Miriam read the agreement and discovered she would need to make 80 weekly payments of $40.
Miriam cancelled the agreement, and said she had already paid approximately $1,200 towards the television (which she had not yet received). She was outside of the 7 day cooling off period during which the agreement could be cancelled without incurring costs.
Doorstep Limited wrote to Miriam and said that she would be receiving a refund of $280, after a cancellation fee of $800 was deducted from her total payments.
The first issue was that Miriam said she had paid $1,200, but Doorstep Limited said she had only paid $1,080.
The second issue was that it appeared from the agreement that cancellation fees of only $395 could be charged, not $800.
Doorstep Limited challenged FSCL’s jurisdiction to investigate the complaint, because it said the contract was a lay-by agreement which is not a ‘financial service’. Doorstep Limited also said that because Miriam had signed the lay-by agreement before Doorstep Limited had become a FSCL member, we could not investigate the complaint.
We agreed with Doorstep Limited that because Miriam had signed a lay-by agreement and not a credit contract, we could not investigate the complaint. FSCL’s terms of reference refer to the definition of a financial service as outlined in the Financial Service Providers (Registration and Dispute Resolution) Act 2008. The definition does not include lay-by agreements.
However, we made it clear to Doorstep Limited that we can investigate a complaint against a current FSCL member, regardless of when the participant became a member, as long as the act or omission giving rise to the complaint first occurred on or after 1 April 2010.
We advised Miriam we could not continue investigating her complaint because she signed a lay-by agreement. However, we did tell Miriam that we had difficulty seeing how Doorstep Limited could justify applying an $800 cancellation fee. We strongly suggested Miriam take her complaint to the Disputes Tribunal and/or seek assistance from her local community law centre.
Lessons to be learned:
You should always take time to read a contract before signing it. It can be difficult when a salesperson is at the door, but remember, you do not have to sign the contract there and then. Make sure you work out how much in total you will be paying for the television or other applicant and compare prices with other retailers.
In addition, you will always have a number of days to cancel the agreement (cooling off period), so make sure to ask the salesperson about this and check the contract to see how long you have.
There are some complaints which fall outside of FSCL’s jurisdiction to investigate. This can sometimes come to light once an investigation has been opened. In these circumstances we may refer complainants to other agencies, like the Disputes Tribunal or community law centres.
Further, FSCL has the jurisdiction to investigate complaints against scheme members, regardless of when the participant became a member, as long as the act or omission giving rise to the complaint occurred on or after 1 April 2010.