Janelle bought a Smartphone from a mobile trader for $1,200 and agreed to set up an automatic payment with her bank to pay for the phone in $20 weekly payments. The mobile trader also charged a $65 delivery fee. The credit agreement Janelle signed included a note “phone delivered straightaway now. She is a very good customer.”
Janelle did not stop the automatic payment instruction to her bank, so continued to pay the mobile trader money after the $1,265 debt was paid. About six months after the loan was repaid, a representative from the mobile trader visited Janelle’s home and reminded her to stop the payment. Janelle said that she would but did not stop the payments for a further three months. Janelle had paid the mobile trader $1,095 more than she needed to.
At around the time Janelle stopped the payments, she asked a Community Law Centre for help because she said the phone had never been delivered. Janelle wanted the mobile trader to refund all the payments she had made.
When the mobile trader declined, with the help of a community lawyer, Janelle complained to FSCL.
Dispute
In addition to Janelle’s complaint that the phone had not been delivered, the community lawyer raised concerns about the mobile trader’s decision to lend.
The mobile trader said the phone was delivered the day Janelle signed the loan agreement and were satisfied they met their responsible lending obligations in the Credit Contracts and Consumer Finance Act 2003 (CCCFA).
The mobile trader also said they were not responsible for Janelle’s overpayment because she was paying by automatic payment, and they could not stop the payment. The mobile trader said they preferred payment by direct debit because they can stop the payment once the item has been paid for.
To resolve the complaint the mobile trader offered to pay Janelle $1,500, which included the $1,095 overpayment and $405 as a goodwill gesture. Janelle still wanted a refund of all the payments she had made and asked us to review her complaint.
Review
Although Janelle said the phone had not been delivered, we considered it more likely than not that she received the phone the same day she signed the credit agreement. In reaching this conclusion, we considered the note on the credit agreement and that it was unlikely Janelle would have continued to pay for something for about three years if she had not received it.
We explained that the mobile trader could not have stopped the automatic payment in the way they can stop the direct debit.
When we asked the mobile trader for the information they gathered from Janelle to satisfy themselves that she could afford to repay the loan without suffering substantial hardship, as required by section 9C of the CCCFA, the mobile trader offered Janelle $1,500 to resolve the complaint.
We encouraged Janelle to accept the offer because, if we were to investigate the complaint and find the mobile trader had not met their responsible lending obligations, the usual remedy is to require the mobile trader to refund the interest and fees charged. As the mobile trader did not charge interest and the only fee charged was the $65 account establishment fee, the most we would be likely to award would be a refund of the overpayment and the $65 fee. The mobile trader’s offer was $405 more than we would be likely to award.
Resolution
Janelle accepted the mobile trader’s offer of $1,500 resolving the complaint.
Insights for consumers
If you choose to pay for a purchase by automatic payment, make sure you know when the last payment is due so you can cancel the automatic payment instruction with your bank.
