Loan sharks fined for trying to claim beds
‘‘The case emphasises that lender contracts cannot suggest that seizure [of prohibited household items] might happen.’’ Commissioner Anna Rawlings
Two Christchurch finance companies have been fined $103,500 for taking security interests over prohibited consumer goods including washing machines, refrigerators, microwaves and beds.
Alternate Finance and Crester Credit Company pleaded guilty to four charges under the Credit Contracts and Consumer Finance Act (CCCFA), for failing to ensure their credit contracts did not take security interests over prohibited consumer goods, the Commerce Commission said.
The companies were ordered to pay $21,237 in statutory damages to 99 borrowers, it said.
Prohibited goods are primarily for personal, domestic or household purposes such as beds and bedding, cooking equipment, medical equipment, portable heaters, washing machines and refrigerators.
Taking security interests over goods means lenders can repossess the goods if borrowers do not make payments on a loan.
Commissioner Anna Rawlings said prohibited goods were protected because these goods were generally worth more to consumers than they were to lenders as security for loans.
‘‘The companies did not attempt to seize any of the prohibited household items but the case emphasises that lender contracts cannot suggest that seizure might happen,’’ Rawlings said.
The two companies have same sole director, David Leighton Diggs, and lend predominantly to consumers in and around Christchurch.
The commission reviewed 68 Alternate Finance contracts, of which 56 showed security interests over prohibited items.
Of 53 Crester Credit contracts reviewed, 43 showed security interests claimed over prohibited items.
In sentencing in the Christchurch District Court on Wednesday, Judge Josephine Bouchier said the CCCFA was for the protection of vulnerable consumers and the companies had undermined the act.
In October 2018, West Auckland finance company Aotea Finance became the first company to be prosecuted for taking security over prohibited items. It was fined nearly $49,000.