Melody agreed to buy a speaker from a door to door salesperson for $999. Melody agreed to pay for the speaker in weekly payments of $40 and signed a contract with a finance company. A couple of months later the same salesperson came to Melody’s home again, offering to sell her a dryer for $1,959. The salesperson told Melody she would only have to increase the payments to $50 a week in total. Melody agreed to buy the dryer.
Melody was shocked when the finance company started debiting her account with weekly payments of $90. Melody could not afford the payments, and went to a budget adviser for help.
The budget adviser had great difficulty getting any information about Melody’s loan from the finance company, but eventually received the loan agreements and the account statements. The budget adviser and Melody were shocked to discover:
- the loan agreement for the speaker was not for $999, but $1,279
- the loan agreement for the dryer was not $1,959, but $2,059.
After Melody had signed the loan agreements the salesperson had added extra costs for headphones Melody believed were a free gift, a $100 delivery fee, and a $75 establishment fee. In addition, the finance company charged a $20 dishonour fee instead of a $15 dishonour fee allowed for in the loan agreement.
Melody wanted the finance company to:
- correct the loan balance for the speaker to $999
- refund the dishonour fees charged
- let her cancel the loan agreement for the dryer at no cost and credit her payments towards the speaker purchase.
When the finance company failed to respond to Melody’s request within 40 days, FSCL began the investigation.
The finance company contacted us immediately saying it wanted to resolve the complaint with Melody, and we agreed.
Melody’s budget adviser contacted us advising that the finance company had done everything Melody had asked for.
The finance company explained:
- a rogue employee, who has been dismissed, altered Melody’s loan agreement after she signed it
- the dishonour fee error was a result of a computer error and has been fixed.
We were pleased to see the finance company’s response to Melody’s complaint, but were concerned that the complaint had reached us in the first place. We expect complaints of this nature to be identified and resolved within a finance company’s internal complaints without the need for our involvement.
We were also concerned that this case showed a possible systemic issue and that other customers of the finance company may have had their loan agreements altered without their knowledge.
We decided to seek further details from the finance company.