The partners of Auckland car finance business Dolbak Finance have been fined $100,000 over car loan contracts that did not properly disclose fees and charges.
In the Auckland District Court, David Dolbel pleaded guilty to 22 charges of breaching the Credit Contracts and Consumer Finance Act and was fined $49,500. Anthony Baker pleaded guilty to 22 charges and was fined $50,500.
The pair has also been ordered to pay $46,600 to customers in statutory damages, meaning 100 borrowers will receive damages of around 5% of their total loan, ranging from $200 - $1,000.
Approximately 100 contracts were entered into when customers bought second-hand cars from Fleetz Wholesale Cars Limited in Penrose between April 2005 and June 2006.
Dolbel and Baker admitted breaching the Credit Contracts and Consumer Finance Act by :
not telling customers what fees and charges applied, how interest was calculated, or how to pay the loan off early;
not sending a copy of the contract to those who acted as guarantors of the loans; and
wrongly showing interest in advance on the borrowers' accounts, rather than showing the interest only when it had been accrued.
Dolbel and Baker also admitted breaching the Fair Trading Act by threatening to repossess nine vehicles when loan payments had not been made. Credit contracts can only be enforced if they comply with the CCCF Act, so Dolbak had no right to repossess the vehicles.
"It is crucial that borrowers get full and accurate information when entering into a loan contract,"
says Commerce Commission Director of Fair Trading Deborah Battell.
"Lenders must clearly disclose all the fees and charges that apply, so that borrowers aren't hit with unexpected costs."
Ms Battell said that customers weren't told about fees and charges including a $5 fee per warning letter if a payment was missed, a $20 fee for sending out a repossession notice, or a $75 fee for preparing a repossession authority."
"The Commission has told Dolbak twice that it was not providing the information required by law, but they chose to ignore those reminders," says Ms Battell.
"Lenders need to understand that any failure to provide full, accurate information will be taken very seriously by the Commission, and by the Courts," says Ms Battell.
Background
Dolbak.
Dolbak, Dolbak Safeguard Limited and Fleetz Wholesale Cars Limited are three entities working from the same premises at 49 O'Rorke Road, Penrose. The three entities provide one-stop services in providing finance and insurance to customers who purchase motor vehicles from Fleetz Wholesale Cars Limited. Anthony Baker and David Dolbel, are the shareholders and directors of Dolbak Safeguard Limited. Anthony Baker is the major shareholder and director of Fleetz Wholesale Cars Limited. Both David Dolbel and Anthony Baker are actively involved in the operations of these three entities.
Previous reminders.
On two instances in December 2005 and March 2006, Dolbak was advised by the Commerce Commission in writing of its potential breaches of the CCCF Act. The former letter also advised Dolbak that it could not enforce its contracts given the apparent non-compliance with section 17 of the CCCF Act.
CCCF Act.
Under section 17 of the CCCF Act, every creditor under a consumer credit contract must ensure that key information (as set out in schedule 1 of the CCCF Act) that is particular to the credit contract is disclosed to the debtor either before the contract is made or within five working days of the day on which the contract is made.
Previous CCCF Act prosecution.
This is the second prosecution under the CCCF Act. In November 2006 Senate Finance was the first company to be fined for breaching the Act. They were fined $59,000.
