KEY POINTS:
Several thousand people who bought items on interest-free terms, then were incorrectly charged interest by GE Money are to get more than $3 million back.
The Commerce Commission said payment of the refunds followed an out of court settlement between the commission and GE Finance and Insurance, trading
as GE Money.
GE Money admitted breaching the Fair Trading Act by making misleading representations to some customers that it was entitled to charge interest during an interest free period specified on their contracts.
About 3610 affected customers will receive a total $3.1 million in refunds.
Affected customers bought goods from Noel Leeming and Bond and Bond stores between late October 2005 and February 2006, with finance provided by Pacific Retail Services which was later purchased by GE Money.
Under the promotion customers were provided finance for a term of three years and were not required to make any payments until an "early exit" date, generally 17 months after the purchase date.
Customers who chose to repay their loan in full by the early exit date only had to pay the purchase price and credit fees, without any interest. After the early exit date customers had to pay instalments that included interest calculated from the date of purchase.
That was despite the loan contract stating there was an interest free period of 17 months, and the contract's terms and conditions noting that interest commenced at the end of the interest free period, the commission said.
Customers who wanted to repay their loans in full shortly after the early exit date found they were required by GE Money to pay hundreds of dollars of interest.
GE Money settled with a small number of customers who individually negotiated "periods of grace" ranging from seven days to a few weeks, and those customers were permitted to repay their loans without being charged interest.
But most affected customers who had not repaid their loans by the early exit date were required to pay interest accrued during the interest free period.
GE Money had admitted its advice to customers that it owed interest accrued during the interest free period was misleading and in breach of the Fair Trading Act.
Commission chairwoman Paula Rebstock said GE Money had co-operated with the investigation, and was not the promoter of the contracts involved.
GE Money managing director New Zealand Greg White said the company apologised unreservedly to all affected customers.
- NZPA