10 Jul 2008

Car finance company ordered to refund customers

4:03 pm on 10 July 2008

The Commerce Commission has ordered an Auckland-based motor vehicle finance company to refund approximately $720,000 to about 1,400 customers.

Equality Finance admitted breaching the Credit Contracts and Consumer Finance Act, and following an out of court settlement was ordered to pay damages.

The commission found the company had in some cases overcharged its customers for the installation and maintenance of an electronic vehicle immobiliser.

Customers who bought a vehicle from Equality Cars Limited with finance through its related finance company were required to have the device fitted.

In every case, Equality Finance had added the full cost of the product over the loan term to the initial loan balance.

This was despite the company being charged by the supplier on a monthly "pay as you go" basis.

Charging the fee before it was due meant that customers were being charged interest on the full amount and would not receive a credit if the loan was repaid early.

Graham Gill, of the Commerce Commission, says he does not believe Equality Finance deliberately tried to deceive its customers. Instead, it appears the finance company got its charging mechanisms wrong.

Mr Gill says this is the second largest settlement the commission has entered into under the Credit Contracts and Consumer Finance Act.