Money lending car dealer fined $22,000

Money lending car dealer fined $22,000

An Auckland-based car dealer has been fined $22,000 and ordered to pay $2,000 reparation in the Auckland District Court after admitting to a number of charges including misleading customers, selling unnecessary warranties, and charging higher interest rates than those agreed. In one case, he charged a customer over 60% interest on a car loan – 35% higher than the rate agreed.

Warwick Keith Nelson Taylor this week admitted four breaches of the Fair Trading Act and three breaches of the Credit Contracts and Consumer Finance Act following a Commerce Commission investigation into his sale of motor vehicles.

Commerce Commission Head of Investigations Ritchie Hutton said: “The Commission takes this sort of offending very seriously. We believe Mr Taylor deliberately targeted vulnerable customers and displayed a clear disregard for consumer laws. This prosecution should send a clear message to Mr Taylor and anyone else who misleads customers that this sort of conduct is totally unacceptable. They should be aware that we will take strong enforcement action where we see harm to consumers.”

The Commission launched the investigation after receiving a complaint from a member of the public, and uncovered a number of other purchasers who had also been deceived. It found between October 2009 and June 2011, Mr Taylor operated as an unregistered motor vehicle trader selling more than 200 low-value motor vehicles and targeting consumers with poor credit histories, including those who were bankrupt.

The investigation found evidence that Mr Taylor breached the Fair Trading Act with a number of those sales on four counts.

• He claimed he was a registered motor vehicle trader when he was not.
• He falsely told purchasers the vehicles had been sold by tender and were therefore exempt from the Consumer Guarantees Act. The sales were not by tender.
• He then sold purchasers unnecessary warranties, charging between $750 and $1250 to cover mechanical issues already covered under statutory warranties.
• He failed to provide Consumer Information Notices (CIN) to some purchasers in respect of the cars sold to them.

The Commission also found evidence Mr Taylor breached the Credit Contracts and Consumer Finance Act in three respects.

• He failed to provide in his credit contracts key information required by the Credit Contracts and Consumer Finance Act.
• His credit contracts provided information that was likely to mislead including:
• He provided finance under a false name, claiming the loans were provided by a ‘Bankrupt Lending Ltd’, when he was the lender or finance party.
• He charged interest rates at between 2.95% and 35.78% higher than the agreed and stated rate of between 25% and 30%). This meant one customer was charged an excess of $2,700 in interest on a low-value car.
• He charged unreasonable loan establishment fees, charging between $250 and $500 for a personal property security interest registration fee when the direct cost to him was around $5 and mainstream finance companies charge $40 for this fee.

In sentencing on Thursday, Judge Collins said he acknowledged Mr Taylor’s willingness to confront his offending and his personal circumstances. He ordered Mr Taylor to pay $2,000 reparation to one of his victims.

Mr Hutton said: “The Commission’s role is to protect the interest of consumers, who have a right to understand and believe what they are being told when they buy goods and borrow money.

“We encourage everyone to be wary of non-registered motor vehicle traders, and make sure they understand the terms and implications of any financial agreements with third tier lenders before committing to them.”